The Reserve Bank of Australia held rates again at its November meeting, in line with expectations.
The central bank kept its cash rate unchanged at 1.5 per cent, as forecast by 39 out of 40 analysts polled by Reuters. The RBA last tweaked interest rates in August 2016, when it cut the key rate from 1.75 per cent to 1.5 per cent.
The RBA forecast for economic growth in 2018 and 2019 was however raised from “a bit above 3 per cent” to about 3.5 per cent on average over two years before slowing in 2020.
Marcel Thieliant, senior Australia and New Zealand economist at Capital Economics, was less sanguine:
For our part, we still think that the RBA is underestimating the impact of the housing downturn on consumer spending. We expect GDP growth to fall to 2.5 per cent next year and remain there in 2020. As a result, we expect inflation to remain below the lower end of the RBA’s 2-3 per cent target band for longer.
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