RBA leaves cash rate unchanged
As we returned from the Labour Day long weekend, the RBA has confirmed their decision to leave the cash rate unchanged at 1.50 per cent at the board’s October monetary policy meeting.
There has recently been a clear upward trend in global economic growth, albeit this has slowed in the past month. The bank has expressed their commitment to reach their long term inflation targets. This was highlighted in the closing paragraph of the bank’s monetary statement:
“Taking account of the available information, and having eased monetary policy at its May and August meetings, 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,”
This will also support the continual moderate growth here in Australia. Although we can see a substantial decrease in mining investment, this decline is being offset by development in other domestic sectors including residential construction and exports.
One of the primary economic indicators that have been influenced by this decision can be seen in the employment rate. The indicators in the recent employment figures have shown that the labour market is “somewhat mixed”.
“The unemployment rate has fallen further, although there is considerable variation in employment growth across the country,” the statement read. “Part-time employment has been growing strongly, while growth in full-time employment has been subdued.”
Despite these varying indicator fluctuations, the RBA appears to be optimistic about the expansion of employment in the medium to long term.
Another area of focus was the Australian housing market, in their statement the RBA noted that “the rate of increase in housing prices is lower than it was a year ago, although some markets have strengthened recently”. This is also in line with the recent strength shown in auction clearance rates as well as new home sales and building approval figures.
Conversely, the statement also highlighted that “growth in lending for housing “has slowed over the past year” and that “growth in rents is the slowest for some decades,” possibly communicating their outlook for Australia’s quarterly CPI release.
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