Today, the Reserve Bank of Australia’s had its first board meeting chaired by new governor, Philip Lowe. As widely predicted, the RBA decided to keep the official cash rate on hold at a record low 1.5 per cent – after cutting interest rates at its August meeting by 25 basis points.
At today’s meeting, the RBA said the global economy is continues to grow at a lower than average pace. In comparison, the Australian economy is continuing to grow, but at a moderate pace. The RBA said inflation remains quite low, and will remain that way for some time.
The central bank also said the large decline in mining investment is being offset by residential construction, public demand and exports.
As for labour market indicators, the RBA says they are somewhat mixed – with the unemployment rate falling, strong growth in part-time employment, but subdued growth in full-time employment.
The RBA said that there has been a slowdown in housing lending over the past year. Also, house prices have increased at a slower rate on the whole (with the exception of property in some markets strengthening recently). Furthermore, growth in rent has been at its slowest for decades.
The central bank noted that commodity prices are above recent lows, but this follows very substantial declines over the past couple of years.
Taking these factors into account, the Board decided that keeping rates unchanged this time is consistent with sustainable economic growth and achieving the inflation target over time.
The Aussie dollar dropped slightly to $US0.7668 following the decision.
