The RBA kept rates unchanged last night at 6.75%.  In addition to the rate announcement, the RBA announced it would release a statement explaining the decision.

Highlights of the statement:

• The economy has relatively little surplus capacity.
• Inflation on a year ended basis, is likely to be above 3 per cent in the first half of 2008, and to decline somewhat thereafter.
• Sentiment in global credit markets has deteriorated recently
• Prospects for growth in the major economies appear to be weakening. 
• Global growth will be closer to trend in 2008, after several years of above trend growth.
• High prices for food, energy and natural resources continue to pose a significant risk to inflation around the world.
• The pressures arising from the global financial turmoil have been less pronounced In Australia
• The flow of credit to sound borrowers does not appear to have been impaired.
• Borrowing costs have risen appreciably since mid year, particularly for business borrowers, 

The statement concluded with the following:

"The Board remains concerned about the outlook for inflation. But 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, it judged that the current stance of monetary policy should be maintained for the time being."