Move along, nothing to see here, come back in a month and there will be more of the same as the Reserve Bank kept its cash rate steady at 1.5% yesterday.
And when you return in a month, it will still be the same call – no change. And that is probably the call for the rest of 2017.
In his usual post meeting statement Governor Philip Lowe basically said there was no need for any move on rates. He pointed out that exports had risen strongly and non-mining business investment was improving (all of which he has said before in the most recent Statement of Monetary Policy ad appearance before the House of Reps Economics Committee).
As well, most measures of business and consumer confidence were at, or above, average (especially the monthly business confidence and conditions surveys from the NAB). Consumption growth was strengthening, although household income growth remained low thanks to weak wages growth.
"The outlook continues to be supported by the low level of interest rates," he added. "Financial institutions remain in a good position to lend. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment."
Conditions in the housing market varied considerably around the country.
"In some markets, conditions are strong and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for two decades."
The AMP’s chief economist, Dr Shane Oliver said after the statement had been issued “we see the RBA remaining on hold this year. Improving growth but could be lower for longer inflation. No rate hike till H2 2018.”
"Labour market indicators continue to be mixed and there is considerable variation in employment outcomes across the country. The unemployment rate has been steady at around 5¾ per cent over the past year, with employment growth concentrated in part-time jobs. The forward-looking indicators point to continued expansion in employment over the period ahead,” Dr Lowe said in his statement.
"Inflation remains quite low. With growth in labour costs remaining subdued, underlying inflation is likely to stay low for some time. Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent, with the rise in underlying inflation expected to be a bit more gradual,“ the statement said.
