Updated
The Reserve Bank has continued to extend its record-breaking run of leaving interest rates on hold.
Key points:
- The RBA says strong jobs data supports its decision to leave interest rates on hold
- While rates were kept on hold, the market has priced in a full rate cut by September this year
- The RBA governor said GDP data painted a “softer picture” of the economy and the drought was having an impact
The bank’s board left its official cash rate at the historic low of 1.5 per cent for the 29th consecutive meeting.
Despite both economic growth and inflation continuing to undershoot forecasts, the decision was not a surprise.
The market had forecast only a 4 per cent chance of a change in April, however it has priced in a full 0.25 percentage point rate cut by September.
A drop in the unemployment rate below 5 per cent and a lift in the forward-looking job vacancy data last month helped firm the RBA’s decision to keep interest rates on hold.
Jobs vs GDP data
In his regular post-decision statement, RBA governor Philip Lowe emphasised the strength of the labour market and pick-up in wages as a “welcome development”.
“Continued improvement in the labour market is expected to see some further lift in wages growth over time, although this is still expected to be a gradual process,” Dr Lowe said.
However, he conceded GDP data painted “a softer picture of the economy than do the labour market data”.
“Growth in household consumption is being affected by the protracted period of weakness in real household disposable income and the adjustment in housing markets,” he said.
“The drought in parts of the country has also affected farm output.
“Offsetting these factors, higher levels of spending on public infrastructure and an upswing in private investment are supporting the growth outlook, as is the steady growth in employment.”
More to come.
Topics:
business-economics-and-finance,
First posted
from Trend Gossip Now https://ift.tt/2Uc0ec8
0 Comments