You’ll need to update your browser so you can continue to log on to your online banking from 28th February. Update now.

Close

News

RBA holds cash rate steady in July

RBA holds cash rate steady in July

The official cash rate remains at 1.5% after the Reserve Bank of Australia’s latest Board meeting.

At its meeting today, the Board of the Reserve Bank of Australia (RBA) decided to leave the cash rate unchanged at 1.5%.

RBA Governor Philip Lowe’s shortened statement was largely unchanged from June. He pointed to the following economic factors as part of the RBA’s decision:

  • Positive business conditions
  • Higher levels of investment in public infrastructure
  • Higher commodity prices boosting national income
  • Strong growth in employment and a significant rise in labour force participation
  • An expectation for a decline in the unemployment rate
  • Low inflation 
  • Low wage growth
  • Conditions in Sydney and Melbourne property markets easing with prices declining

One of Lowe’s biggest changes to the statement was around the global economic picture, with the new wording, “The global economic expansion is continuing... One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States. There have also been strains in a few emerging market economies, largely for country-specific reasons."

What to expect for the rest of 2018

According to Craig James, Chief Economist at Commsec, “Consumers are generally upbeat about their finances and the outlook for the economy. The problem for retailers is that higher petrol prices are serving to restrain spending.”

“CommSec expects no change to official interest rates until early 2019. The extremely slow lift in wage and goods price growth suggests the first rate hike in the new cycle won’t occur until next year,” said James.

Tim Lawless, Head of Research at CoreLogic, shares James’ view that an official cash rate change may not come for some time.

“Economic conditions remain reasonably stable, housing market growth continues to slow, household debt is at record highs, and inflation remains around the lower end of the RBA target range,” said Lawless.

“With this scenario as a backdrop, the hold decision today from the RBA was widely anticipated. It is looking increasingly as if the cash rate will hold at record lows throughout 2019; this is the view of financial markets where the ASX cash rate yield curve indicates the cash rate will remain on hold until at least November 2019.”

Things you should know: This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.