At its meeting yesterday, the Board of the Reserve Bank of Australia decided to leave the cash rate unchanged at the record low of 1.50 per cent.

The Bank’s forecasts for the Australian economy are largely unchanged. Over the next couple of years, the central forecast is for the economy to grow at an annual rate of around 3 per cent. The transition to lower levels of mining investment following the mining investment boom is almost complete, with some large LNG projects now close to completion.¬†Business conditions have improved and capacity utilisation has increased. Some pick-up in non-mining business investment is expected.

The current high level of residential construction is forecast to be maintained for some time, before gradually easing. Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years.

One source of uncertainty for the domestic economy is the outlook for consumption. Retail sales have picked up recently, but slow growth in real wages and high levels of household debt are likely to constrain growth in spending.

The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

With current interest rates at record lows, now is a good time to consider your buying or refinancing options.

 

You can read the full statement from the RBA here

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