As widely expected, the RBA kept the cash rate unchanged at 1.5% for the twelfth consecutive meeting last week. The accompanying statement was similar to last month’s with guidance unchanged and no hint of any change to the official cash rate in the near future.
RBA Governor Phil Lowe spoke last week and elaborated on the post-RBA Board meeting statement. He expressed optimism that there will ultimately be a cyclical rise in wages as the labour market improves, but stressed it will be a while before we are closer to full employment and inflation close to the mid-point of the 2% to 3% target. The next move in rates should be up, but not for a while. Lowe re-iterated that the appreciating Australian dollar is unhelpful.
Accordingly, many economists continue to see no change in the cash rate this year and with no inflation pressures, low wages and subdued economic growth, maybe even next year as well!