Australia Monetary Policy December 2018

Australia

Australia: RBA holds the policy rate stable in December

December 4, 2018

At its 4 December monetary policy meeting, the Reserve Bank of Australia (RBA) again left the cash rate unchanged at the all-time low of 1.50% where it has been for over two years. The move matched market expectations.

The Bank’s decision came amid moderate inflation, falling house prices and subdued consumer spending despite a solid labor market and some pick-up in wage growth. Inflation slowed from 2.1% in the second quarter to 1.9% in the third quarter, also due to a fall in some administered prices. It therefore moved slightly below the lower bound of the Bank’s 2.0%–3.0% target. Moreover, housing prices in the east coast continue to decline, also due to dwindling appetite among investors. That said, the Bank expects inflation to move slightly above 2.0% in 2019, before accelerating further in 2020. The Bank also considers the economy to be performing solidly, supported by strong resource exports and non-mining business and infrastructure investment. It projects an expansion of around 3.5% on average this year and next, although sees the economy losing some pace in 2020.

The Reserve Bank of Australia noted global trade is showing some signs of weakening. This, coupled with softening growth in China, represent the main downside risks to the global outlook. Although the communiqué was again devoid of any further forward guidance, the continuous tightening in labor market conditions should gradually fuel faster wage hikes in the medium-term, translating into higher inflation. In the face of a tightening labor market and an expected pick-up in wages, the Bank is thus likely to enter a gradual tightening cycle next year.

Australia Interest Rate Forecast


FocusEconomics panelists on average expect mild monetary tightening this year, although several panelists expect rates to remain unchanged. Our panelists see the cash rate ending 2019 at 1.71% and 2020 at 2.13%.


Author: Massimo Bassetti, Senior Economist

Sample Report

Looking for forecasts related to Monetary Policy in Australia? Download a sample report now.

Download

Australia Monetary Policy Chart


Australia Monetary Policy December 2018

Note: RBA Cash Rate in %.
Source: Reserve Bank of Australia (RBA).


Australia Economic News

  • Australia: Retail sales jump in November

    January 11, 2021

    Nominal retail sales in November soared 7.1% over the previous month in seasonally-adjusted terms, following October’s 1.4% increase. Particularly pronounced increases were recorded in household goods retailing, clothing, footwear and personal accessory retailing, department stores, cafes, restaurants and takeaway food services and other retailing. In annual terms, retail sales jumped 12.1% in November, following October’s 7.7% expansion.

    Read more

  • Australia: Unemployment rate drops in November

    December 17, 2020

    Seasonally-adjusted employment soared by 90,000 in November, following revised 180,400 jobs gain in October (previously reported: +178,800).

    Read more

  • Australia: Business confidence at highest level in close to three years in November

    December 11, 2020

    The business confidence index produced by National Australia Bank (NAB) soared from 3.2 points in October to 12.4 points in November, marking the highest reading since April 2018.

    Read more

  • Australia: Consumer sentiment at over 10-year high in December

    December 11, 2020

    The Westpac-Melbourne Institute consumer sentiment index surged from 107.7 in November to 112.0 in December, marking the highest reading since October 2010.

    Read more

  • Australia: Retail sales rebound in October

    December 4, 2020

    Nominal retail sales in October expanded 1.4% over the previous month in seasonally-adjusted terms, contrasting September’s 1.1% drop. Particularly pronounced increases were recorded in cafes, restaurants and takeaway food services, as well as in food clothing, footwear and personal accessory retailing.

    Read more

More news

Search form