At its board meeting today, The Reserve Bank of Australia (RBA) decided to leave the official interest rate unchanged at 1.50 per cent.
The interest rate has remained at this record low since August 2016, when it was cut from 1.75 per cent. As such, this marks two years of consecutive meetings resulting in a ‘hold’ verdict.
In a statement explaining the decision, the RBA stated that while conditions in the global economy are improving, the current level of interest rates continues to support the Australian economy and that its hold verdict would be consistent with sustainable growth in the economy and achieving the inflation target over time.
The Bank paid mention to strong employment figures, low wage growth, low inflation, the slowing housing markets in Sydney and Melbourne, slowing investor demand for property, the expected decline in Australia’s terms of trade, the decline in housing credit growth and low nationwide measures of rent inflation.
The RBA also said that while APRA’s supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets, the level of household debt remains high.
The Bank said recent data on the Australian economy has been consistent with the Bank’s central forecast for GDP growth to pick up, to average a bit above 3 per cent in 2018 and 2019.
This decision breaks the record yet again for the longest period of time in Australian history that the cash rate has remained unchanged.
Today’s verdict was largely predicted by industry experts. While some economists are questioning how long this holding streak will continue, others are tipping a rise in the second half of the year.
For more details, read the RBA’s official statement.
