(Australian Associated Press)
The Reserve Bank has kept the official cash rate at a record low of 1.5 per cent as it sounded an uncertain note about the outlook for consumption.
The RBA, whose decision at Tuesday’s March board meeting means the cash rate has not moved in 31 months, said it still expected the economy to grow by about 3.0 per cent in 2019 thanks to a strong labour market.
But the central bank acknowledged that, with GDP data due out Wednesday, Australian economic growth may have slowed in the second half of 2018 and that faltering property markets and weak wages growth remain concerns.
“The growth outlook is being supported by rising business investment, higher levels of spending on public infrastructure and increased employment,” governor Philip Lowe said in his monetary policy decision statement.
“The main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities.”
The consensus forecast from economists is for GDP to have grown by about 0.4 per cent in the fourth quarter, and 2.6 per cent over the full year.
That’s below the RBA’s 2.75 per cent forecast, and some economists tip the central bank to make at least one rate cut in 2019.
The cash rate, which reflects what the central bank charges commercial banks on overnight loans and influences all other interest rates, was last cut in August 2016 and hasn’t been hiked since November 2010.
The Australian dollar briefly lifted to 70.89 US cents from 70.78 just before the RBA announcement at 1430 AEDT, but was back at 70.74 30 minutes later.