Australia Keeps Key Rate At Record Low
November 05 2019 - 1:00AM
RTTF2
Australia's central bank maintained its key interest rate
unchanged, as widely expected, after cutting it by a quarter point
in October.
The board of the Reserve Bank of Australia, governed by Philip
Lowe, decided to leave the cash rate unchanged at a record 0.75
percent.
The central bank had lowered the rate by 25 basis points in
October, which was the third such reduction this year.
The RBA said the easing of monetary policy since June is
supporting employment and income growth and a return of inflation
to the medium-term target range.
The bank reiterated that it is prepared to ease monetary policy
further if needed to support sustainable growth in the economy,
full employment and the achievement of the inflation target over
time.
Further, the bank said it is reasonable to expect that an
extended period of low interest rates will be required in
Australia.
According to RBA, inflation will pick up, but only gradually. In
both headline and underlying terms, inflation is expected to be
close to 2 percent in 2020 and 2021.
Lowe said the outlook for the Australian economy is little
changed from three months ago. RBA forecast economic growth of
around 2.25 percent in 2019 before gradually picking up to 3
percent in 2021.
The central bank is set to release its quarterly growth forecast
on November 8.
The RBA's optimistic forecasts for GDP growth and the labor
market will soon face a reality check and the Bank will have to
ease policy by more than most anticipate, Marcel Thieliant, an
economist at Capital Economics, said.
The low level of interest rates, recent tax cuts, ongoing
spending on infrastructure, the upswing in housing prices in some
markets and a brighter outlook for the resources sector should all
support growth, Lowe said.
The main domestic uncertainty continues to be the outlook for
consumption, the governor noted.
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