Markets had priced for the cash rate to remain steady, with the ASX 30 day interbank cash rate futures market giving a 98 per cent chance of ‘no change’ at 3 April 2017.
Members of the ANU Centre for Applied Macroeconomic Analysis (CAMA) RBA Shadow Board also said keeping the cash rate at 1.5 per cent made sense, with Shadow Board member and professor of economics at Macquarie University Jeffrey Sheen noting Australia’s GDP growth wasn’t currently supportive of a cash rate hike.
“The current annual GDP growth in Australia of 2.4 per cent remains tepid, reflected in continuing low wage growth as well as business investment,” he said.
“With the big lenders having raised their mortgage rates in response to the cost of foreign funds, the case for a cash rate rise has been weakened.”
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