The Reserve Bank of Australia today decided to keep the current official cash interest rate at its historic low level of 1.5 percent. An earlier survey by Reuters showed 47 out of the 48 economists predicted the rate would remain unchanged.
In his monetary policy statement earlier, RBA Governor Philip Lowe noted the strong global and local economies, the growth experienced by several advanced economies and the low unemployment rates.
“The recent data on the Australian economy have been consistent with the bank’s forecast for GDP growth to an average of 3 percent this year and in 2019,” Lowe said.
Business conditions remain positive while business investment in non-mining sectors is also increasing. The high levels of investment in public infrastructure and growth in exports have been noted to support the country’s economy.
In terms of employment, Governor Lowe noted a strong growth over the past year. This growth was accompanied by an increase in labour force participation particularly women and older Australians. The unemployment rate of 5.5 percent has not changed in the past year. The Reserve Bank forecasts a solid growth in employment in the coming months with a gradual reduction in unemployment. Wages growth remains to be low at this time but the bank foresees a rise over time.
With regards to the housing sector, the markets in Melbourne and Sydney continue to slow down with price falls noted in many areas in the past six months. A rise in supply of apartments are still expected in the eastern capital cities in the coming years. Risks in households have been contained owing to the supervisory measures and tighter credit standards imposed by APRA.
A slow growth in household income and high levels of debt were also noted by the RBA Governor.
This is the 20th straight months that the Reserve Bank has not lifted interest rates. The last time it cut the cash rate was in August 2016.
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By Wendy Chamberlain
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With a passion for all things real estate spanning 18 years, Wendy loves that her role as a Buyers Advocate gives her buyers an experienced voice they can trust when it comes to negotiating to purchase something as important as their new home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.wendychamberlain.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.