RBA rate unchanged November 2017
As many have suspected, the Reserve Bank of Australia (RBA) has forecast that the Australian economy is largely unchanged and has left the official cash rate unchanged for November 2017 at 1.5 per cent at a record low for the 15th month in a row.
In his monetary statement, RBA governor Philip Lowe said that the decision to keep the cash rate unchanged came as conditions in the global economy are continuing to improve.
"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," said Lowe.
While housing market conditions in Sydney have eased further, housing prices have shown little change over recent months in most cities, although they are still increasing in Melbourne. Additional supplies of apartments are expected to finish in the next couple of years and rent increases will remain low in most cities which have helped to alleviate some of the pressure to raise the cash rate.
“Tougher lending conditions have arguably had a similar effect as a lift in the cash rate, except the effect is more focused on slowing investment activity across the housing sector while low interest rates continue to provide a broader and much needed economic stimulus.”
“The outlook for non-mining business investment has improved, with the forward-looking indicators being more positive than they have been for some time. Increased public infrastructure investment is also supporting the economy. One continuing source of uncertainty is the outlook for household consumption. Household incomes are growing slowly and debt levels are high.”
The RBA will release new forecasts for both GDP and inflation in its quarterly Statement on Monetary Policy on Friday which is widely expected to show the economy is growing marginally slower than forecasted.
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