The Reserve Bank has rolled its emergency low interest rate setting into a second year, leaving the official cash rate on hold at 1.5 per cent.
Indeed, markets have been shifting the betting of the next move further over the horizon, and now price in a full 25 basis point hike well into 2020.
The RBA’s last move was a cut to its current historic low in August 2016.
While the RBA left its central forecast for the Australian economy unchanged — GDP growth averaging a bit above 3 per cent through this year and next — it did tweak some of its commentary.
The near-term inflation forecast was edged down to 1.75 per cent this year, not rising to 2.25 per cent as stated in earlier communications.
However, the unemployment forecast was revised down marginally and was now expected to decline to 5 per cent, rather than 5.25 per cent “over the next couple of years”.
Global worries
One area RBA governor Philip Lowe sounded a note of caution over was the global economy, and in particular China.
“Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector,” Dr Lowe said in his post-decision statement.
“One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.” abc
