Reserve Bank of Australia Leaves Interest Rates Unchanged
By James Glynn
SYDNEY--The Reserve Bank of Australia has ended 2017 without a change in interest rates, with next year promising to deliver more of the same.
The central bank's board kept its cash rate target at a record low of 1.5% Tuesday as universally expected by economists.
The bank's holding pattern, stretching back to August 2016, leaves the RBA lagging many of its global counterparts, including the Federal Reserve, the European Central Bank and the Bank of England, which have already raised interest rates this year, or are preparing to reduce the level of policy accommodation.
The decision comes after RBA Governor Philip Lowe told economists in late November there was no compelling case for a change in interest rates.
When announcing the on-hold decision Gov. Lowe reiterated Tuesday that 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."
Foremost in the minds of policy makers are record low wages growth, ongoing slack in the job market and a dearth of inflation pressures.
That weakness comes with consumers reluctant to spend more, weighed down by record household debt and concerns that incomes aren't growing.
Still, there are signs of some pep building in the economy, with investment strengthening, jobs growth improving, and profits high. All that comes as business surveys indicate firms are experiencing the best conditions in 20 years.
Economists expect the impression of a two-speed economy will keep policy makers watchful, unlikely to either raise or lower interest rates for the foreseeable future.
Write to James Glynn at [email protected]