The Reserve Bank of Australia (RBA) released its interest rate decision on Tuesday. The RBA cut its interest rate to a new record low of 2.25%, down from 2.50%. The RBA said that the Aussie remains overvalued.
The RBA Governor Glenn Stevens said in a statement that Australia's economy grows below trend, and domestic demand growth is overall weak. He noted that the unemployment rate increased over the past year.
Stevens pointed out that the central bank expects that "output growth will probably remain a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected".
The RBA governor also said that the inflation in Australia showed the lowest rise for several years in 2014, driven by falling oil prices at the end of the year and the removal of the price on carbon.
Stevens noted that the Australian dollar remains "above most estimates of its fundamental value", despite the recent decline. He pointed out that a lower exchange rate is needed "to achieve balanced growth in the economy".