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RBA leaves cash rate unchanged for 25th consecutive month

Australian dollar unaffected as the Reserve Bank of Australia announces to keep cash rate unchanged at 1.50% for the 25th month.

IG Analyst

Publication date : 2018-10-02T05:55:00+0100

Reserve bank of Australia

Source: Bloomberg

The Reserve Bank of Australia announced on Tuesday it will keep rates on hold at 1.50% for the 25^th month.

The central bank’s widely predicted decision comes to no surprise to analysts who predict the cash rate will remain unchanged until 2020.

The latest national accounts confirmed the Australian economy has grown stronger over the past year, with the GDP increasing by 3.4%.

The bank forecasting growth to average just about 3% in 2018 and 2019, while it predicts non-mining business investment is expected to increase.

The RBA’s assessment for labour markets remains positive. The unempolement rate is trending lower at 5.3% at the lowest rate in 6 years, with the RBA expecting the unemployment rate to gradually decline over the next few years to 5 %.

Inflation is at 2% and forecast to be higher in 2019 and 2020. Housing markets have continued to ease, and rent inflation remains low nationwide. Low level of interest rates continues to support the Australian economy.

The Australian dollar against the US dollar was little changed upon the announcement, continuing to trade at 0.7225 before and after the statement.

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