The year 2017 has been the year or low interest rates as the Reserve Bank has left the official cash rate at 1.5 per cent for its final month.
The entire year has seen the RBA interest rate unchanged at the record low of 1.5 per cent, and it’s the 16th month in a row now rates have sat there.
The RBA cited low wage growth and inflation sitting below the target growth rate of 2 per cent as the main reasons to not lift rates this month.
“Household incomes are growing slowly and debt levels are high,” said RBA governor Philip Lowe in a statement.
“There are reports that some employers are finding it more difficult to hire workers with the necessary skills. However, wage growth remains low.”
“This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time.”
The Australian Prudential Regulation Authority also released figures this week that indicated the RBA doesn’t need to worry as much about lifting rates to cool overheated property markets.
APRA says interest-only housing loans fell again in the three months to September.
“Nationwide measures of housing prices are little changed over the past six months, with conditions having eased in Sydney,” said the RBA’s statement.
Gareth Aird from the Commonwealth Bank told The Age the cash rate will stay where it is until wage growth and inflation started to head north.
“The latest data on both wages and inflation suggests that while we have probably hit inflection points, we remain some way off from a rate rise,” he said.
“Indeed the RBA’s own forecasts for core inflation are consistent with policy on hold over the next year.”