RBA keeps cash rate on hold

By Reporter
 — 1 minute read

The Reserve Bank of Australia (RBA) has elected to keep the official cash rate on hold at 1.5 per cent at its first meeting with Philip Lowe as governor.

The RBA's decision to keep the official cash rate on hold at 1.5 per cent was in line with the predictions of the vast majority of economists.

In addition, the ASX 30 Day Interbank Cash Rate Futures October 2016 contract was pricing in a 98 per cent chance of 'no change' to the cash rate on 3 October.


CommSec market analyst Savanth Sebastian said the RBA is happy to "sit comfortably on the sidelines" as it awaits further data to see how the economy is tracking.

Specifically, the RBA is awaiting the release of the September 2016 quarter inflation figures on 26 October before it makes its first move on interest rates.

The ANU Centre for Applied Macroeconomic Analysis (CAMA) RBA Shadow Board said there was "little economic news, not even OPEC’s decision to cut oil output, to justify a change in the current cash rate".

The RBA Shadow Board attached a 65 per cent probability that 'no change' is the appropriate policy for the RBA for October.

Looking ahead six months, the Shadow Board's estimated probability that the cash rate should remain at 1.5 per cent is 27 per cent; the probability of an interest rate decrease is 13 per cent; and the probability of an increase is equal to 61 per cent.


RBA keeps cash rate on hold
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