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

Latest RBA cash rate decision

Latest RBA cash rate decision

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 statement was largely unchanged from September. He pointed to the following economic factors as part of the RBA’s decision:

  • Positive business conditions
  • Higher levels of investment in public infrastructure
  • Growth in resource exports
  • Unemployment rate at 5.3%, the lowest rate in almost 6 years
  • An expectation for a decline in the unemployment rate to around 5% over the next couple of years
  • Low inflation 
  • Low wage growth
  • Conditions in Sydney and Melbourne property markets easing

One of Lowe’s changes to the statement was about the rate of growth of the Australian economy.

“The latest national accounts confirmed that the Australian economy grew strongly over the past year, with GDP (Gross Domestic Product) increasing by 3.4%,” said Lowe. 

What's ahead for the Australian economy?

Tim Lawless, Head of Research at CoreLogic, said the RBA’s decision was widely anticipated and the financial markets do not expect a change in the official cash rate in the short term.

“Cutting the cash rate would likely provide further support to economic conditions, but could also risk refuelling growth in housing prices, as was the case in 2016 when the cash rate was cut by 50 basis points between May and August,” he said. 

“Although we expect housing values to drift lower, such low mortgage rates, together with population growth and relatively strong economic conditions should help to keep a floor under housing prices.”

Craig James, Chief Economist at Commsec, agrees a change in cash rate may not come for some time.

“The on-going lift in petrol prices has the potential to crimp consumer spending. At the same time, with unleaded petrol and diesel prices rising, there is upward pressure on transport costs, potentially affecting prices with a high transport component like fresh food. At present CommSec doesn’t expect a change in the cash rate until later in 2019,” James said.

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.