RBA steers rates on a steady course, as widely expected

The Reserve Bank of Australia (RBA) at its monetary policy meeting today, left the official cash rate (OCR) unadjusted at a record low of 1.50% for the nineteenth meeting in a row.

The RBA statement read: “The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. 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 regard to the inflation level, the RBA added: “Inflation remains low. The recent inflation data were in line with the Bank's expectations, with both CPI and underlying inflation running marginally below 2 per cent. Inflation is likely to remain low for some time, reflecting low growth in labor costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in 2018.”

On the exchange rate value: “The Australian dollar has depreciated a little recently, but on a trade-weighted basis remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”