Interest Rate in Australia
Australia - Interest Rate
RBA holds the policy rate stable in December
At its 4 December monetary policy meeting, the Reserve Bank of Australia (RBA) again left the cash rate unchanged at the all-time low of 1.50% where it has been for over two years. The move matched market expectations.
The Bank’s decision came amid moderate inflation, falling house prices and subdued consumer spending despite a solid labor market and some pick-up in wage growth. Inflation slowed from 2.1% in the second quarter to 1.9% in the third quarter, also due to a fall in some administered prices. It therefore moved slightly below the lower bound of the Bank’s 2.0%–3.0% target. Moreover, housing prices in the east coast continue to decline, also due to dwindling appetite among investors. That said, the Bank expects inflation to move slightly above 2.0% in 2019, before accelerating further in 2020. The Bank also considers the economy to be performing solidly, supported by strong resource exports and non-mining business and infrastructure investment. It projects an expansion of around 3.5% on average this year and next, although sees the economy losing some pace in 2020.
The Reserve Bank of Australia noted global trade is showing some signs of weakening. This, coupled with softening growth in China, represent the main downside risks to the global outlook. Although the communiqué was again devoid of any further forward guidance, the continuous tightening in labor market conditions should gradually fuel faster wage hikes in the medium-term, translating into higher inflation. In the face of a tightening labor market and an expected pick-up in wages, the Bank is thus likely to enter a gradual tightening cycle next year.
Australia Interest Rate Forecast
Met the why particular panelists on average expect mild monetary tightening this year, although several panelists expect rates to remain unchanged. Our panelists see the cash rate ending 2019 at 1.71% and 2020 at 2.13%.
Australia - Interest Rate Data
|Policy Interest Rate (%)||2.50||2.50||2.00||1.50||1.50|
5 years of economic forecasts for more than 30 economic indicators.
Australia Interest Rate Chart
Source: Reserve Bank of Australia.
|Bond Yield||2.31||1.47 %||Jan 21|
|Exchange Rate||0.72||0.05 %||Jan 21|
|Stock Market||5,954||0.08 %||Jan 21|
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January 16, 2019
The Westpac-Melbourne Institute consumer sentiment index fell from 114.4 in December to 99.6 in January.
January 11, 2019
Nominal retail sales growth in November came in at 0.4% over the previous month in seasonally-adjusted terms, following October’s 0.3% expansion.
December 20, 2018
Seasonally-adjusted employment increased by 37,000 in November compared to the previous month, following the revised 28,700 jobs added in October (previously reported: +32,800 jobs) and overshooting analysts’ expectations for a gain of 20,000.
December 12, 2018
The Westpac-Melbourne Institute consumer sentiment index inched up from 114.3 in November to 114.4 in December.
December 11, 2018
The business confidence index produced by National Australia Bank (NAB) declined to 3.2 points in November from October’s revised 4.5 points (previously reported: 4.2 points).