No change from the Reserve bank to its official cash rate which remains unchanged at 1.50% after the central bank’s board meeting yesterday.
It was a decision widely expected, especially after the slightly weaker than forecast inflation reading last week of 0.4% quarter on quarter and 1.9% for the year to March.
In fact there was very little change to the post meeting statement issued after the 19th meeting where the bank sat on rates (and 21 months).
The bank did mention the tightening in US and Australian money markets (which has actually started to unwind a bit in the past four days or so), the rise in the price of oil and the recent decline in the Australian dollar and a return to expecting growth this year and next to be a little above 3%.
The AMP’s chief economist, Dr Shane Oliver says there “was nothing here to suggest an imminent change in monetary policy.”
"While the global backdrop, business conditions, non-mining investment and infrastructure activity are positive and will lead to some acceleration in growth, uncertainty remains around the outlook for consumer spending, household debt is high, banks are tightening lending standards, wage growth and inflation remain low and will pick only gradually and house prices are falling.
“As a result, the RBA is likely to remain on hold for a long time yet and we don’t see a rate hike until 2020 at the earliest,” Dr Oliver said.
Friday’s second Statement of Monetary Policy is not likely to contain much in the way of change to the growth forecasts, as expected by a few economists given the comments in yesterday’s statement that “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,” Governor, Dr Phil Lowe said.
In his February statement, Dr Lowe said in part: "The Bank’s central forecast for the Australian economy is for GDP growth to pick up, to average a bit above 3 per cent over the next couple of years."
Likewise this description from his statement on Tuesday of current economic activity has hardly changed as well:
“This (the 3% and a bit GDP forecast) should see some reduction in spare capacity in the economy. 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.
"One continuing source of uncertainty is the outlook for household consumption, although consumption growth picked up in late 2017. Household income has been growing slowly and debt levels are high.”
No change and final paragraph of yesterday’s statement 9which always sums up the policy stance) was steade as she goes, as it has been in past months:
"The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
