RBA announces cash rate decision

The RBA board has decided to keep the cash rate at 1.5%, a move predicted by most industry experts.

Head of investment strategy and chief economist at AMP Capital, Shane Oliver, correctly predicted the RBA’s decision, but he said that despite strength in some economic indicators, factors such as low inflation, stunted wage growth, consumer uncertainty and the high exchange rate would have all been considered by the RBA in its decision to hold rates where they were.

CoreLogic’s head of research, Tim Lawless, wasn’t surprised by the central bank’s decision, and he also made reference to slowing activity in the housing market, citing a 0.7% fall in dwelling values.

Mr Lawless said: “With headline inflation remaining below the RBA’s target range of 2–3%, housing markets moving through a controlled slow down, a higher than forecast Australian dollar and household debt at record highs, the hold decision from the Reserve Bank was widely expected.”

However, 81% of the panellists predicted that the next cash rate movement will be up, with 12 panellists expecting the RBA to lift the cash rate as early as May.

Source: The Adviser