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RBA outlines cash rate reasoning
The cash rate has remained unchanged for August, with the RBA explaining its decision to maintain the current rate at its historic low.
RBA outlines cash rate reasoning
The cash rate has remained unchanged for August, with the RBA explaining its decision to maintain the current rate at its historic low.
After yesterday’s announcement, Reserve Bank of Australia governor Philip Lowe described the outlook for the global economy as remaining “reasonable”, despite the Australian dollar being at “its lowest level of recent times”.
Dr Lowe also highlighted the impact of record-low yields from long-term government bond yields and historically low borrowing rates affecting businesses and households.
“It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target,” he explained.
Noting economic growth in Australia for the first half of the year as “lower than earlier expected”, Dr Lowe considered that household consumption has been weighed down by a protracted period of low income growth and declining housing prices.
“The central scenario is for the Australian economy to grow by around 2.5 per cent over 2019 and 2.75 per cent over 2020,” he offered, with this outlook being supported by the low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some housing markets and a brighter outlook for the resources sector.
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