RBA hands down interest rate decision for May
The Reserve Bank of Australia has announced its decision on the official cash rate for this month following speculation from certain economists and commentators about a potential cut.
Despite some of the predictions about a cut for May, the Reserve Bank has decided to leave the official cash rate unchanged at 1.50 per cent for the 32nd consecutive month.
Prior to the RBA announcement, St.George senior economist Janu Chan said that it would be a close call for the RBA this month.
“Low inflation and weak growth outlook suggests a case can be made for a rate cut. However, the ongoing strength of the labour market suggests that the RBA may want to wait to see incoming data unfold,” Ms Chan said.
“Recent RBA commentary suggests it may want to reconcile the strength in the labour market and weak economic growth before acting.”
My Housing Market chief economist Andrew Wilson also predicted that the official interest rate would remain on hold despite the subdued inflation data.
“Low inflation in isolation should not be a catalyst to change the interest rate cycle after nearly three years on hold,” Mr Wilson said.
“Early signs of higher wages growth, a continuing strong labour market and indications that recent declines in house prices may now be bottoming out suggest the RBA will remain on the sidelines for another month.”
AMP capital chief economist Shane Oliver predicted that the RBA would make a cut this month due to weaker than expected inflation in the last quarter.
“Rate cuts were already on the way, thanks to slower economic growth and the downturn in the housing cycle, but weaker than expected underlying inflation in the March quarter argues that the RBA should move sooner rather than later,” Mr Oliver said before the official announcement.