Australia central bank holds rates at 1.5pc

Published: June 05, 2018 13:56:25 | Updated: June 08, 2018 10:35:30

Reserve Bank of Australia (RBA), the central bank of the country, has left interest rates unchanged at the historic low of 1.5 per cent for the 20th consecutive meeting.

The RBA made the announcement following its monthly policy meeting on Tuesday, reports AP.

The current holding pattern is the longest stretch without a move, with the central bank last changing rates with a 25 basis point cut in August 2016.

The decision of the RBA was of little surprise, with the market pricing no chance of a move.

A Reuters poll found 47 of 48 economists surveyed forecast a hold, the one dissenting voice suggested the RBA would cut.

The central bank governor Philip Lowe maintained both the domestic and global economies were gaining strength.

"The recent data on the Australian economy have been consistent with the bank's central forecast for GDP growth to pick up, to average a bit above 3.0 per cent in 2018 and 2019," Dr Lowe said in a statement.

Following a spate of stronger-than-expected data, economists have upgraded the consensus GDP growth forecast, to be released to tomorrow, to about 2.8 per cent year-on-year for the first quarter – a significant acceleration from the 2.4 per cent recorded over 2017.

"Business conditions are positive and non-mining business investment is increasing," Dr Lowe said.

While increased government spending on infrastructure and a stronger contribution from the export sector had helped boost the RBA's confidence, household spending remained a worry.

"Household income has been growing slowly and debt levels are high," Dr Lowe said.

"Wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time."

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