Australia Monetary Policy October 2016

Australia

Australia: RBA keeps interest rate unchanged at October meeting

October 4, 2016

At its 4 October monetary policy meeting, the Reserve Bank of Australia (RBA) kept its policy rate steady at an all-time low of 1.50% after cutting its rate by 25 basis points twice this year, once in May and once in August. The decision met market expectations and came against a backdrop of low inflation, slow wage growth and a moderate growth outlook overall for the Australian economy. It marked Philip Lowe’s first monetary policy meeting as RBA governor since he took over from a retiring Glenn Stevens on 18 September.



In its accompanying statement, the RBA noted that Australia’s moderate pace of growth was underpinned by functioning financial markets, gradually recovering commodity prices—which has caused the decline in mining investment to slow—and robust consumer and business sentiment. Inflation remains subdued and is expected to remain weak due to low labor costs and global inflationary pressures.



Against this backdrop, the Board judged that, “holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

FocusEconomics Consensus Forecast panelists expect the cash rate to end 2016 at 1.46% and see it falling to an average of 1.29% by the end of 2017.


Author:, Economist

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Australia Monetary Policy October 2016

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


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