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RBA Rate Unchanged for June

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RBA Rate still the same for June 2018

The Reserve Bank of Australia have decided to keep the official cash rate unchanged at 1.50% for what is now drawing close to nearly two years. The rate has stayed at this figure for the last 19 consecutive RBA meetings, which is the longest period of time it has seen without any movement.

The last time the RBA moved the cash rate was in August 2016, when it decreased it by 25 points. The RBA has yet to lift the interest rate since 2010.

It is predicated that a 25 point rise in the cash rate is not expected until November 2019 at the earliest.

This is due to a variety of reasons including declines in Sydney and Melbourne property prices, coinciding with a steep drop in investor housing finance and multi-year lows in auction clearance rates. There is also still a level of uncertainty regarding the recent soft patch in global activity levels, along with tensions between the United States and other countries when it comes to trade arrangements (with the USA reinstituting tariffs against all countries apart from Australia, Argentina, Brazil and South Korea). Moreover, the Italian government has taken up the anti-establishment coalition while the Spanish government has dissolved.

GDP levels are predicted to pick up their pace but are still currently falling below the trend. "We expect growth across both the household and business sectors, with consumption growth making a significant contribution in addition to business investment, where the handover to the non-mining sector is set to continue," NAB's Gareth Spence and Tony Kelly wrote over the weekend.

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

For the official RBA article, please visit the Reserve Bank’s website.