The Reserve Bank of Australia (RBA) has announced it will keep Australia’s cash rate at its historic low of 1.5% for the 13th consecutive month.
The cash rate last moved in August 2016, shifting down to the current rate.
RBA Governor, Philip Lowe said the economy is growing in line with expectations and was likely to pick up.
“The recent data have been consistent with the Bank’s expectation that growth in the Australian economy will gradually pick up over the coming year,” he said. “The low level of interest rates is continuing to support the Australian economy.”
The RBA Governor also said that while residential construction activity remains at a high level, little further growth is expected. He also noted that employment growth has been stronger over recent months and has increased in all states.
“The various forward-looking indicators point to solid growth in employment over the period ahead. The unemployment rate is expected to decline a little over the next couple of years,” he said.
Mr Lowe noted that wage growth remains low and this is likely to continue, however, stronger conditions in the labour market should see some lift in wages growth over time. Inflation also remains low and is expected to pick up gradually as the economy strengthens.
For those investing in property, the overall outlook is positive, according to Ironfish Apartments Manager, William Mitchell.
“The RBA has indicated that the economic outlook is positive with employment and wages growth expected to strengthen in the coming years. Furthermore, the cash rate is at a historic low, with most economists expecting the rate to remain on hold for some time to come. This is something that property investors will continue to take advantage of,” said Mr Mitchell.
Tim Lawless at CoreLogic said the RBA’s decision to keep the cash rate on hold was in line with industry expectations.
“With headline inflation tracking slightly below the 2-3% target range, labour markets tightening and the economy continuing to grow, albeit at a pace below trend, the chances of a rate cut appear to have diminished.
“However, rate hikes may be some way off as well; recent declines in the US dollar and strengthening commodity prices have placed added pressure on the Australian dollar, which may reduce export demand. Financial markets indicate the cash rate won’t rise until late 2018,” he said.
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