After maintaining a neutral bias on the outlook for official interest rates in yesterday’s monthly meeting, the Reserve Bank of Australia (RBA) have once again decided to keep the official cash rate on hold at 1.50%. October’s meeting saw minimal changes in statements from the RBA regarding its views in the Australian and global economies.
The RBA have maintained the cash rate at 1.50% since August 2016, now stretching for over two consecutive years. Hinting that the bank still sees the next move in official interest rates as higher, RBA Governor Philip Lowe said that “further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”, repeating the view from September.
“Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,” said Lowe.
“The low level of interest rates is continuing to support the Australian economy.”
“The latest national accounts confirmed that the Australian economy grew strongly over the past year, with GDP increasing by 3.4%, Lowe stated, referring to the Australia’s Q2 GDP report released a day after the RBA’s September policy meeting.
Other trends appear to remain in line with last month; debt levels are still high whilst growth in household incomes continues to be at lower levels. The housing markets in Sydney and Melbourne continue to ease and growth in credit for owner-occupiers has stayed robust.
While Australian economic growth is currently strong, the RBA is still yet to be fully satisfied that it will lead to lower unemployment, faster wage growth and stronger inflationary pressures, allowing it to begin normalising policy settings. The current signals are broadly positive, but it’s not at this point yet.
For the official RBA article, please visit the Reserve Bank’s website.