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$A drops on RBA's downbeat meeting minutes

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The Australian dollar is lower after the Reserve Bank of Australia delivered a more downbeat view of the economy.


At 1700 AEST on Tuesday, the local currency was trading at 93.51 US cents, down from 94.07 cents on Monday.


The minutes of the central bank's June board meeting highlighted the RBA's concern about how the tough federal budget and expected falls in mining investment could impact the economy.


The Australian dollar fell half a US cent following the release of the minutes.


'A surprisingly dovish tone in the RBA minutes put some pressure on the Australian dollar in trading today,' FXCM market analyst David de Ferranti said.


'The central bank delivered a relatively downbeat outlook for economic growth in light of cuts to fiscal spending and uncertainty over whether growth in non-mining sectors of the economy can counteract the expected drop-off in resources investment.


'With wage growth also expected to remain low, the board seems unconcerned about the potential for inflation to pick up, which further suggests that we will not see a shift in gears from the RBA any time soon.'


The RBA has kept rates at a record low 2.5 per cent since August and indicated they would remain unchanged 'for some time yet'.


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