Interest Rate in Australia
Australia - Interest Rate
RBA stands pat in August
At its 7 August monetary policy meeting, the Reserve Bank of Australia (RBA) left the cash rate unchanged at its all-time low of 1.50%, where it has been since August 2016. The move was widely in line with market expectations.
The Bank’s decision was underpinned by low inflationary pressures and unremarkable wage growth. Recently released inflation data shows that inflation moved within the Bank’s 2.0%–3.0% target range in Q2, but it nevertheless remained moderate, coming in at 2.1%. Weak wage growth and strong competition among retailers continued to keep prices in check. Going forward, wage growth should gain speed as skills shortages are emerging in certain areas. However, the RBA expects inflation to ease somewhat in the months to come thanks to one-off declines in some administered prices.
The Bank reaffirmed its view that the economy is on track to grow slightly above 3.0% on average in both 2018 and 2019, boosted by rising investment in non-mining businesses and public infrastructure, as well as by sustained growth in resource exports. However, elevated debt levels, sluggish wage rises and easing growth in the housing market could weigh on household spending. Overall, the pick-up in economic activity has yet to feed through to stronger inflationary pressures.
The Bank highlighted some downside risks in its communiqué in August, including slowing growth in China and trade protectionism in the U.S. Nonetheless, the statement was largely devoid of forward guidance. Given that wage growth is expected to eventually gain momentum and inflation should pick up only in 2019 and 2020, the RBA will likely maintain its current monetary policy stance in the short-term and hike rates gradually in the future, although the timeframe of monetary tightening remains unclear.
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 2018 at 1.70% and 2019 at 2.23%.
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||2.66||1.47 %||Aug 07|
|Exchange Rate||0.74||0.05 %||Aug 07|
|Stock Market||6,341||0.08 %||Aug 07|
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August 7, 2018
At its 7 August monetary policy meeting, the Reserve Bank of Australia (RBA) left the cash rate unchanged at its all-time low of 1.50%, where it has been since August 2016.
August 3, 2018
Nominal retail sales growth in June came in at 0.4% over the previous month in seasonally-adjusted terms, matching May’s reading and coming in above market expectations of a more moderate 0.3% rise.
July 25, 2018
In the second quarter of 2018, consumer prices rose 0.4% over the previous quarter, according to the Australian Bureau of Statistics (ABS).
July 19, 2018
Seasonally-adjusted employment increased by 50,900 in June compared to the prior month, following the revised 13,110 jobs created in May (previously reported: +12,000 jobs) and easily overshooting analysts’ expectations of much softer job growth.
July 11, 2018
The Westpac-Melbourne Institute Index of Consumer Sentiment jumped from 112.1 in June to 116.1 in July, the highest reading since November 2013 and further above the 110 mark that separates optimism from pessimism among consumers, where it has now been for eight consecutive months.