Interest rate of Australian center bank stands at 0.75

Daniel Fowler
November 6, 2019

The Reserve Bank of Australia (RBA) made a decision to keep the official interest rate on hold at 0.75 percent following a monthly board meeting on Tuesday. Sydney isn't far behind, advancing 1.7% last month and rebounding 5.3% since May.

Widening the target band could have lessened pressure for further rate easing.

"The US - China trade and technology disputes continue to affect global trade flows and investment as businesses scale back spending plans because of the uncertainty", he said. Lowe is trying to push down the jobless rate in order to spur wage growth and revive inflation.

The Statement on the Conduct of Monetary Policy agreed between the central bank and the government was established in 1996 and has been updated six times since then.

"The Board will continue to monitor developments, including in the labor market, and is prepared to ease monetary policy further if needed".

He said the outlook for the Australian economy was little changed from three months ago.

"Comparing reactions to fiscal and monetary policy easings historically, the current response is at the lowest end of the range", he added. That said, there are still some key events to keep an eye on, including tonight's confab at the Reserve Bank of Australia (RBA).

Offshore, key trading partner China continues to slow and instability from Brexit to Hong Kong is weighing on global growth.

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"Although the cash rate has remained on hold, lenders are becoming increasingly competitive, particularly for high quality borrowers - those with low debt relative to their incomes and a responsible track record of savings together with expenses that are in line with their incomes".

"[These are] the lowest mortgage rates [we've had] since at least the 1950s", he said.

Canstar's money expert, Effie Zahos, said the Reserve Bank has been upbeat about the economy with Governor Philip Lowe's latest comments showing a lack of urgency to move the cash rate in November.

The agreement leaves in place the RBA's target of keeping inflation in a 2-3% band on average over the medium term, when there had been some speculation it might be widened to 1-3%, as followed by neighboring New Zealand.

"Throw in the latest underwhelming retail sales figures, an all important indicator into how Aussies are spending, and you can understand why low rates are here to stay".

More gloomy economic data released on Monday had already reinforced an impression it is a question of when - not if - the next rate cut comes.

According to the ASX's RBA Rate Indicator tool, the odds of the central bank remaining on hold tonight are 93% with the remaining 7% of the market betting on an interest rate cut.

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