At its monthly meeting yesterday, the Reserve Bank Board decided to leave the cash rate unchanged at 1.00 per cent. This follows the two 0.25% decreases to the cash rate in June and July.
In short, while the global economic outlook remains positive, there are several downside risks to world economic growth including trade and technology disputes. Inflation is subdued with many central banks also decreasing interest rates this year.
Locally, Australia’s inflation rate is below the target band of the Reserve Bank, and is expected to be for some time. The unemployment rate of 5.2% is higher than preferred despite record increases in employment, which have been due to more supply of labour. Wages growth has also been subdued.
Increased wage growth would be welcome, and there is cautious optimism about the housing market stabilising.
The Board will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time
The full statement supporting the decision by Philip Lowe, Governor of the RBA, can be found here https://www.rba.gov.au/media-releases/2019/mr-19-23.html
For more information please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au