RBA keeps interest rate on hold for its 27th consecutive meeting
The Reserve Bank of Australia (RBA) has held official interest rates at 1.5 per cent for the 27th consecutive meeting despite continuing signs the economy is struggling. All the 26 economists polled by Bloomberg had an expectation that the cash rate would remain at 1.5 per cent.
The continuing decline in house prices — coupled with weak consumer sentiment, low wage growth and construction sector rolling over — has led to fears the economy is not only slowing, but could stall or even go into reverse.
It was only last month that the RBA cut its forecast for GDP growth to 2.4 per cent for the year to June 2019. This was forecasted at 3.2 per cent back in November 2018.
RBA Governor Philip Lowe has stated that the bank expect that the unemployment rate will move down to 4.75 per cent this calendar year, as well as economic growth to rise by about 3 per cent. He also noted that growth had slowed in the second half of 2018.
“The main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities."
“A pick-up in growth in household income is nonetheless expected to support household spending over the next year."
With economic headwinds rising, pressure is mounting on the RBA to cut the already historically low cash rate. Australian National University’s RBA Shadow Board found that while keeping interest rates on hold was the “appropriate” decision, the prospect of a rate cut is increasing.
For the official RBA article, please visit the Reserve Bank’s website.