THE dollar climbed sharply today after the Reserve Bank of Australia left interest rates unchanged and indicated there is little rush to cut rates again soon.
Earlier, government data showed retail sales rose at their fast pace in seven months in January, stoking talk that already near-record-low interest rates are driving a recovery in spending and housing.
At 4.30pm AEDT, the Aussie bought $US1.0243 from $US1.0123 late in local trade yesterday. It traded as high as $US1.0245 in Asia.
The Reserve Bank kept the benchmark cash-rate target at 3 per cent, a low previously reached in the aftermath of the global financial crisis. Most economists had expected no change.
RBA governor Glenn Stevens cited a modest improvement in non-mining parts of Australia's economy and increasing ease about conditions in Europe and China.
Still, low inflation would keep the door open to further rate cuts should the economy slow unexpectedly, the RBA said.
"We continue to expect the RBA has room to cut rates once more by 25 basis points given there remain pockets of weakness in the domestic economy," said Janu Chan, economist at St George Bank. "However, we believe that the RBA will need a bit more time to assess how earlier rate cuts are taking effect."
Earlier today, data showed January retail sales were up 0.9 per cent from December, the Australian Bureau of Statistics reported, higher than the 0.4 per cent increase expected by economists.
"Last month consumer confidence soared almost 8 per cent in response to the decision to leave rates unchanged," said Craig James, chief economist at CommSec. "If consumers are similarly happy after today's rate decision then retailers and other consumer-focused businesses will have reason to cheer."
Attention will now turn to the release of fourth-quarter economic growth data tomorrow. Economists expect economy to have expanded by about 3 per cent over the year to December 31.
