Interest Rate in Australia
Australia - Interest Rate
RBA cuts rates in June on weak inflation and higher unemployment
At its 4 June monetary policy meeting, the Reserve Bank of Australia (RBA) cut the cash rate to a fresh all-time low of 1.25% from 1.50%, where it had been since August 2016. The move matched expectations of a rate cut due to low inflation and subdued economic activity. Moreover, the RBA did not rule out a further rate cut in case the labor market underperforms.
Stubbornly-low inflation, a pick-up in unemployment and heightened global trade tensions were behind the Bank’s decision to reduce the policy rate. Inflation slowed to 1.3% in Q1 from Q4’s 1.8%, landing further below the Bank’s 2.0%–3.0% target, while the unemployment rate rose to 5.2% in April from March’s 5.1%. Moreover, subdued retail sales in Q1 and the first drop in retail sales in April point to a further weakening in consumer spending, which is being weighed down by sluggish wage growth, high levels of debt and a continued—albeit recently softening—correction in house prices. That said, robust non-mining business and infrastructure investment continues to underpin economic activity, while wage growth is picking up some steam. Against this backdrop, the Bank projects underlying inflation of 1.8% in 2019, before accelerating to 2.0% in 2020.
The Reserve Bank of Australia cited exacerbating global trade disputes and weakening investment intentions as the main downside risks to the global outlook. The communiqué suggests the RBA will leave the doors open to some further monetary policy loosening in the near-term, which will ultimately depend on the evolution of the labor market and spare capacity utilization.
FocusEconomics panelists are still weighing up the Bank’s latest decision.
Australia - Interest Rate Data
|Policy Interest Rate (%)||2.50||2.50||2.00||1.50||1.50|
5 years of economic forecasts for more than 30 economic indicators.
Australia Interest Rate Chart
Source: Reserve Bank of Australia.
|Bond Yield||1.40||1.47 %||Jun 13|
|Exchange Rate||0.69||0.05 %||Jun 13|
|Stock Market||6,619||0.08 %||Jun 13|
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June 13, 2019
Seasonally-adjusted employment increased by 42,300 in May from the previous month, following the revised 43,100 jobs added in March (previously reported: +28,400 jobs) and more than doubling analysts’ expectations of a gain of 17,500.
Australia: Consumer sentiment dips on weak national accounts but remains in optimistic territory in June
June 12, 2019
The Westpac-Melbourne Institute consumer sentiment index dipped to 100.7 in June from 101.3 in May.
June 11, 2019
The business confidence index produced by National Australia Bank (NAB) jumped to 7.3 points in May from April’s revised plus 0.1 points (previously reported: minus 0.3 points).
June 5, 2019
Australia’s economy gained steam in the first quarter, supported by a stronger external sector and a softer contraction in fixed investment, according to figures released by Australia’s Statistical Institute (ABS) on 5 June.
June 4, 2019
Nominal retail sales in April dipped 0.1% over the previous month in seasonally-adjusted terms, swinging from March’s 0.3% uptick.