The board of the Reserve Bank of Australia decided to keep the interest rate at the same percentage of 6.75, but it has concerns regarding inflation.
The central governor of the bank, Glenn Stevens, stated that inflation was likely to be above 3% in the first half of 2008, and to decline somewhat thereafter.
During the last month, RBA raised the cash rate by a quarter percentage in order to control price. The RBA had raised the cash rate by a quarter percentage point last month to control price growth.
Given the heightened uncertainty about the international outlook and the local trends in wholesale borrowing costs, both of which could have a bearing on inflation over the medium term, [the RBA board] judged the current stance of monetary policy should be maintained for the time being, said Stevens.
The Australian currency dropped 0.4% to $0.8688 and fell 0.3% to 95.54 yen after the announcement has been made.