SYDNEY--Australia's central bank said interest rates may still be cut again next year as the local currency remains "uncomfortably high," hindering a shift away from mining-dependent growth as a long resources boom slows.
In minutes of its Dec. 3 policy meeting, published Tuesday, the Reserve Bank of Australia said a recovery in non mining industries remained "very weak," tempering the outlook for growth.
The central bank last week held interest rates steady at a record-low 2.5% for the fourth-straight monthly meeting, reiterating that it was looking for stronger signs a recovery in non mining industries was more than a blip before it would be prepared to shift rates.
"It was prudent to hold the cash rate steady while continuing to gauge the effects of earlier reductions, but not close off the possibility of reducing it further," the meeting minutes said. "While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy," the central bank added.
Reserve Bank Governor Glenn Stevens has been repeatedly attempting to jawbone the currency lower in recent months, saying he wouldn't rule out intervention. Last week he said predicted it could fall to 85 U.S. cents over time. The remarks saw it sink to a three-month low of 89 U.S. cents.
The Australian dollar is down about 14% against the U.S. dollar so far this year.
-Write to James Glynn at james.glynn@wsj.com
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