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 rates, but expects faster economic growth this year

RBA holds rates, but expects faster economic growth this year

The Reserve Bank of Australia left the official cash rate on hold at 1.5% after its March board meeting.

The Reserve Bank of Australia (RBA) kept the official cash rate on hold at 1.5% today after its second board meeting of the year, but said it expects the Australian economy to grow faster in 2018 than it did in 2017.

The Australian dollar traded briefly around an intraday high of 77.91 US cents immediately after the announcement at 2.30pm (Sydney/Melbourne time), but dropped to around 77.79 US cents over the following hour, according to Bloomberg data.

RBA Governor Philip Lowe’s statement indicated that the RBA "remains optimistic on the domestic and global economic outlook", CommBank's economics team said in a note after the release.

Rate expectations

The team said this reinforced "that rate hikes are still some time away", adding, "we expect the RBA to leave the cash rate at 1.5% until November".

"The inflation and wages outlook give the RBA plenty of time before they need to consider altering current cash rate settings," CommBank said.

In the RBA statement, Governor Lowe's outlook for growth over 2018 was reworded to note that "the Bank’s central forecast is for the Australian economy to grow faster in 2018 than it did in 2017".

In February’s view, the RBA was expecting that gross domestic product (GDP) growth should "pick up and average a bit above 3% over the next couple of years".

What does this mean for the property market?

Governor Lowe noted that the housing markets in Sydney and Melbourne have slowed.

Tim Lawless, Head of Research at CoreLogic said: “The controlled slowdown in housing markets, driven by subtle falls across Sydney and Melbourne, have eased pressure on the RBA to lift rates in order to quell housing market exuberance. Higher on the RBA Board’s agenda is likely to be inflation and employment.”

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. As the information on this page has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances. 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. Past performance is not an indication of future performance. 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.