RBA Announces ‘ON HOLD’ decision for the official interest rate
The official interest rate remains at the record low of 1.5% for the 12th month straight following the RBA meeting today, a move widely predicted by industry commentators who believe the economy is still not strong enough to justify a rate hike and not weak enough to warrant a cut. Inflation has dropped to 1.9%, just below the RBA’s target range of 2-3% and unemployment remains steady at 5.6%. Despite concerns with the Australian dollar rising to US80c it is still not enough to warrant a rate cut.
Interest rates are expected to remain on hold in the short to medium term with Financial Markets not pricing in a cash rate rise until late next year.
The Australian dollar has appreciated recently, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
Click here for the full statement from the RBA.