RBA cash rate holds steady

RBA cash rate holds steady

The Reserve Bank of Australia has elected to keep the cash rate flat at 1.5 per cent at its third board meeting of the year.


The decision falls in line with market expectations, with the ASX 30-day Interbank Cash Rates Futures pricing in a 100 per cent chance of no change for the week leading to today’s decision.

AMP Capital chief economist Shane Oliver also indicated last week that the RBA was “likely to leave rates on hold for the 20th month in a row”, surpassing the previous record of 19 months without change between January 1995 and July 1996.

“High business confidence, strong jobs growth and the RBA's own growth and inflation forecasts argue against a rate cut, but risks around consumer spending, weak wages growth and inflation, the slowing Sydney and Melbourne property markets and the still too high Australian dollar argue against a rate hike,” he said.

“We don’t see the RBA commencing a tightening cycle until first half 2019 and an emerging further tightening in bank lending standards around home borrower income and expenses, along with any flow through to higher mortgage rates from the recent increase in short-term funding costs could delay this.”

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