RBA cash rate remains 'on hold'

RBA cash rate remains 'on hold'

The Reserve Bank of Australia has chosen to keep the official cash rate on hold at 1.5 per cent for the eighteenth month in a row.


The RBA made the announcement to keep the rash rate unmoved at 1.5 per cent during its second meeting of 2018.

While commentators agreed a rate hike was on the horizon, many said it was still too soon.

“Wery weak wages growth, sub-target inflation, the Australian dollar remaining too high and uncertainty around the outlook for consumer spending all argue for rates to remain on hold or even fall,” said AMP Capital chief economist Shane Oliver.

“On balance it makes sense to continue to leave interest rates on hold.”

NAB chief economist Alan Oster and St George Bank senior economist Janu Chan echoed sentiments that the wages data was still too weak and pointed to the spare capacity that remained in the domestic economy.

In contrast, Australian National University Centre for Applied Macroeconomic Analysis RBA Shadow Board’s Mark Crosby said a rate hike was “now very near”.

“The only issue is the wait on international market moves and whether the RBA should be ahead or following in particular the [US] Fed[eral Reserve],” he said.

“Assuming a first rate rise does happen in the next few months, a further rise later in the year should follow unless financial market volatility is significant after a first increase.”

But Metropole Property Strategists director Michael Yardney disagreed that the Reserve Bank would be taking its cues from its American counterpart, arguing RBA governor Philip Lowe “has made it clear that Australian rates don't need to be in lock step with overseas rates”.

“There is currently no reason to change rates to either stimulate or slow down our economy,” Mr Yardney said.

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