RBA closed the year on hold – UOB
Lee Sue Ann, Economist at UOB Group, assessed the recent ‘on hold’ decision by the RBA.
“The Reserve Bank of Australia (RBA) held its official cash rate (OCR) steady at a record low of 1.5% at its final interest rate decision for 2017 – giving mortgage holders an early Christmas present. The decision marks the 16th consecutive month that the OCR has been left at this historically low setting. The last time we saw this prolonged period of interest rate stability was back in 2013/14 when the cash rate was left on hold for 17 consecutive months”.
“The concluding paragraph of the latest RBA’s accompanying statement was exactly the same in November, with the RBA stating that “The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”. Overall, the rest of the statement saw little changes as well”.
“The RBA says that recent data suggest that the Australian economy grew at around its trend rate over the year to the September quarter. It continues to highlight that one continuing source of uncertainty is the outlook for household consumption”.
“The RBA acknowledges that employment growth has been strong over 2017 and the unemployment rate has declined. However, wage growth remains low and is likely to continue for some time”.