The RBA has kept the official cash rate at just 0.1 per cent for another month as forecasters continue to suggest that’s where they’ll stay for another year or two.
The decision comes in the face of booming property markets around the country and RBA governor Philip Lowe said there has been strong housing demand from owner-occupiers and first-home buyers.
“Housing markets have strengthened further, with prices rising in all major markets,” he said.
“Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers.
“Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”
New home loans for the month of March in Australia grew 5.5 per cent from the previous month with the economy as a whole also rebounding quite strongly.
“The economic recovery in Australia has been stronger than expected and is forecast to continue,” Dr Lowe said.
“This recovery is especially evident in the strong growth in employment, with the unemployment rate falling further to 5.6 per cent in March and the number of people with a job now exceeding the pre-pandemic level.”
Dr Lowe again reiterated that the central bank was not keen to lift rates until inflation hit their 2-3 per cent target.
“The RBA will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range,” he said.
“For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently.
“This is unlikely to be until 2024 at the earliest.”