RBA keeps interest rate on hold

RBA keeps interest rate on hold

The Reserve Bank of Australia elected to keep the official cash rate steady at two per cent for September.


Westpac chief economist Bill Evans said the RBA is confident that inflation, currently 1.5 per cent, will stay within the two to three per cent band for the next few years.

“There is nothing in the [August RBA] statement that would motivate us to move away from our call that rates will remain on hold in 2015 and through the course of 2016,” Mr Evans said.

The ANU’s Centre for Applied Macroeconomic Analysis ‘Shadow Board’ attached a 77 per cent probability to a cash rate of two per cent being the correct setting.

“Wild swings in global stock markets have made investors edgy, the economic news coming out of China is not favourable and domestic private investment has plummeted,” said the Shadow Board’s September statement.

“On the other hand, US growth surged to 3.7 per cent annually and fears of a debt crisis in the eurozone have abated.”

NAB group chief economist Alan Oster said it is too early for the RBA to move the cash rate, since it is waiting to assess the impact of past cuts.

Commonwealth Bank chief economist Michael Blythe said further is stimulus is “not required”, and the Australian dollar is in the RBA’s “comfort zone”.

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