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.
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.”