Interest rates on hold again as RBA eyes a sunnier outlook


The Reserve Bank has kept interest rates on hold for the second month in a row amid the resurgent property market in Melbourne and Sydney.

The RBA’s outlook for the economy is gathering momentum, citing stronger global economies and rising commodity prices.

The sunnier outlook from the Reserve Bank comes despite concerns over unemployment in the country and the stagnant inflation rate which still sits below their 2-3 per cent target range.

CommSec’s Craig James told The Australian Financial Review that the central bank’s outlook was improving.

“This is a more “hawkish” assessment than has been previously expressed in previous statements,” he said.

“The Reserve Bank says that inflation has bottomed and that the economy is set to grow at a faster than normal pace.”

The RBA’s statement was indeed more upbeat this month and again noted the resurgent property market in the nation’s two biggest cities off the back their two interest rate cuts this year.

New RBA governor Philip Lowe downplayed the never-ending concerns of a property bubble, saying property price growth is still down on last year, there were a large number of new under-construction apartments to hit the market in coming years and rents were growing at the slowest rate they have for decades.

Dr Lowe said he expects the economy to gradually strengthen with inflation to gather speed also, while there were also concerns about the differing unemployment situation around the country and a general fall in full time jobs.

The unemployment rate looks set to be the deciding factor when the RBA meets again to decide on rates next time around.





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