Reserve Bank leaves interest rates on hold for 21st month in a row
Meeting in Sydney's Martin Place at 2:30pm, the nation's top economists decided to leave the official cash rate at the record-low level of 1.5 percent.
Interest rates have not changed since August 2016.
Despite an improved national economy, RBA governor Philip Lowe said a stalling in the jobless rate has forced the central bank to operate with patience.
"The Bank's central forecast for the Australian economy remains for growth to pick up, to average a bit above 3 per cent in 2018 and 2019. This should see some reduction in spare capacity in the economy," said Lowe.
"Business conditions are positive and non-mining business investment is increasing. Higher levels of public infrastructure investment are also supporting the economy. Stronger growth in exports is expected."
The decision to keep interest rates on hold comes a day after the Australian National University's "shadow board" – also run by economists, academics and experts – recommended that now is the "appropriate" time to raise rates by 25 basis points.
The shadow board's recommendation comes just seven days before the release of the federal budget, widely expected to be one of the most lavish on record in terms of spending.
Tim Lawless, head of research at property data firm CoreLogic, said inflation was not high enough to justify an increase.
"The Reserve Bank’s hold decision was widely anticipated, considering core inflation is only just nudging the bottom of the RBA’s target range at 2.0 percent and the labour market continues to show plenty of spare capacity with an unemployment rate of 5.5 percent," Lawless said.
"Of course, the heat has also come out of the housing market, with CoreLogic today reporting another slip in national home values in April, largely driven by weaker conditions in Sydney and Melbourne.
"Nationally, dwelling values have been moving through a controlled slowdown since October last year which has taken a great deal of pressure away from the RBA to lift rates in order to curb exuberance in dwelling investment."
*Original article on nine.com.au 1st May 2018