The Reserve Bank of Australia (RBA) has decided to keep Australia’s official cash rate on hold at record low of 2.5 per cent for its eight straight meeting. As broadly expected the central bank held its fire with the steady rate call and affirmed its neutral policy bias.
The RBA’s statement pointed out a pick-up in credit growth, a significant rise in dwelling prices over the year and an improvement in indicators for the labour market.
Looking ahead the central bank believes continued accommodative monetary policy should provide support to demand and help growth to strengthen over time. As a result, the RBA says the most prudent course is likely to be a period of stability in interest rates.
FNN spoke to CommSec Chief Economist, Craig James ahead of today’s RBA announcement who echoed the RBA’s sentiments:
“At the May Reserve Bank board meeting I think its London to a brick that the Reserve Bank leaves interest rates unchanged. We’ve got inflation, really in a nice spot at the moment. We’ve got underlying inflation well in the Reserve Banks two to three per cent target band and there doesn’t seem to be any great tendency for underlying inflation to be pushing outside that band or shooting below that two per cent bottom end of the target band. I think growth is looking pretty good at the moment, housing market’s providing that contribution to our economy. The international risks are very much in balance at the present. I don’t think that the Reserve Bank, probably even for the next couple of months will need to do anything on interest rates.
