Interest rates remain on hold at beginning of new financial year
At their meeting today the RBA kept rates unchanged, marking a record 10 months of a stable approach – the longest period of stability in almost a decade.
RBA Governor Glenn Stevens cited moderate growth in consumer demand and strong expansion in housing construction, along with a contraction of public spending in the Bank’s decision.
“Overall, the Bank still expects growth to be a little below trend over the year ahead,” says Stevens.
“There has been some improvement in indicators for the labour market in recent months, but it will probably be some time yet before unemployment declines consistently. Growth in wages has declined noticeably. If these and other domestic costs remain contained, inflation should remain consistent with the target over the next one to two years, even with lower levels of the exchange rate.
“Monetary policy remains accommodative. Interest rates are very low and for some borrowers have edged lower over recent months. Savers continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. Dwelling prices have increased significantly over the past year, though there have been some signs of a moderation in the pace of increase recently.”