Cash rate decision announced by Reserve Bank
The Reserve Bank of Australia has announced the result of its monthly board meeting.
The central bank confirmed market predictions by leaving the official cash rate at a record-low 2.5 per cent for the 15th consecutive month.
All 33 experts surveyed by comparison website finder.com.au had forecast that the cash rate would remain on hold.
AMP Capital’s Shane Oliver noted that “nothing much has changed” since the RBA’s last board meeting.
“Growth is OK, but still sub-par; global uncertainties remain; the Australian dollar is still too high; inflation is still benign; and the RBA is yet to drop its reference to a ‘period of stability’ in rates being prudent.”
CommSec economist Savanth Sebastian said there was no evidence to suggest that the Reserve Bank’s board members had changed their minds about the economy.
“The board believes that the cash rate is at the right level to support the economy and keep inflationary pressures in check,” he said.
All but three of the experts surveyed by finder.com.au expect the cash rate to start rising in 2015.
Two of those said the rate rise would come in 2016, while APM’s senior economist Andrew Wilson said the next move in rates would be a fall in the first quarter of 2015.
Dr Wilson said although the Reserve Bank still had to weigh up “mixed signals” in the economy, the negative signs now outweighed the positive.
“The Reserve Bank is waiting for crystallisation of the general economic climate – but house prices are now falling, inflation is low, unemployment and the dollar are still too high, the share market is weaker and there are rising concerns over the global economic outlook,” he said.