Tag archive: RBA

News: Reserve Bank Puts Interest Rates On Hold at 1.5 Per Cent

The Reserve Bank has left the official interest rates on hold at a record low of 1.5 per cent.

The bank board last changed the rates in August, cutting them by 25 basis points.

While business investment and employment numbers have improved, the bank board still maintained its conservative approach to rate setting.

“The various forward-looking indicators point to continued growth in employment over the period ahead,” said Philip Lowe, the bank’s governor.

“Wage growth remains low, however, and this is likely to continue for a while yet. Inflation is expected to increase gradually as the economy strengthens.”

Housing debt remains a major concern for the RBA. “Growth in housing debt has outpaced the slow growth in household incomes,” the bank stated. “The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness.”

However, there are some positive outlooks. “In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades.”

RBA

RBA Keeps Interest Rates at 1.5 Per Cent

The Reserve Bank of Australia (RBA) has announced that it would keep the cash rate at 1.5 per cent, only two weeks after governor Philip Lowe said more interest rate cuts might be necessary to prevent rising inflation.

“The board judged that holding the stance of policy unchanged … would be consistent with sustainable growth in the economy and achieving the inflation target over time,” the RBA stated.

“The bank’s forecasts for output growth and inflation are little changed from those of three months ago,” Dr. Lowe said in a statement on Friday.

“Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years.”

The RBA also expected commodity prices to stabilise after inflating by 9.5 per cent in October.

Economists expect the rate to remain on hold, at least through 2017.

“Moving forward, if domestic economic data remains strong, there should be no reason for the Reserve Bank to change their stance on monetary policy,” said John Flavell, chief executive at Mortgage Choice. “As such, the cash rate could be left on hold at 1.5 per cent for the foreseeable future.”

“Even though the underlying inflation rate is still below the RBA’s target rate, ‘keeping its powder dry’ is absolutely the right monetary policy decision for the moment,” said Brendan Rynne, chief economist at KPMG. “Waiting for a clearer picture of which way the local and international economic forces are moving is smart.”