* RBA deliberated for a very long time before holding rates
* Aussie falls to fresh three-year low below $0.91
* Transition from mining investment boom challenging -
(Adds comments on deliberations, market reaction)
SYDNEY, July 3 The cooling of Australia's
long-run mining investment boom will pose a significant
challenge, but the central bank stands ready to help support an
economy shifting to a new source of growth, the head of the
Reserve Bank of Australia said on Wednesday.
Speaking just a day after the RBA left its cash rate
unchanged at a record low 2.75 percent, RBA Governor Glenn
Stevens said the board "deliberated for a very long time" before
That surprised markets, which had expected the decision to
hold rates to be more clear-cut and helped knock the Australian
dollar to its lowest level in three years.
Stevens noted that the non-resource sectors could not be
guaranteed to strengthen on cue and to the right degree.
"The Reserve Bank, for its part, has a well-established
monetary policy framework. Guided by this, we will be able to
continue to do our part, consistent with our mandate, to assist
the transition in sources of demand that is needed," he told a
business lunch in Brisbane.
"We cannot fine-tune it - no one can promise that - but we
will do what can reasonably be done."
The RBA has slashed its cash rate by a total of 200 basis
points since late 2011. Its latest move was in May.
Stevens said with interest rates low, sectors such as
housing and non-mining business investments should pick up in
He also said he was surprised by the resilience of the
strong local dollar, but noted that free-floating exchange rates
"do eventually adjust" and if the economy needed a lower
exchange rate, it would probably get one.
The Australian dollar fell to a low of $0.9098, its lowest
since September 2010, as markets priced in a better than 50
percent chance of a further cut in interest rates next month.
"The upshot is that the RBA was closer to cutting (interest
rates) than we thought after yesterday's post-meeting
statement," said Joseph Capurso, currency strategist at
Commonwealth Bank of Australia.
The Aussie has fallen around 12 percent in the past two
months on a trade-weighted basis, bringing relief to many
exporters and the tourism sector.
(Reporting by Ian Chua and Lincoln Feast; Editing by Eric