Official interest rates look set to stay at 1.5% for some time yet

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Official interest rates look set to remain at their record-low of 1.5 per cent for some time yet.

In their opening statement for the year, the Reserve Bank has indicated that any movement in rates in the current economic climate would be a slow-moving affair.

“Further progress in reducing unemployment and having inflation return to target is expected,” RBA governor Philip Lowe said in the statement.

“Although this progress is likely to be gradual.”

The RBA’s formal forecasts point to continued, albeit slow, reductions in the national unemployment rate which currently sits at around 5.5 per cent.

On the downside, the RBA says the economy is being dogged by slow wage growth and high household debt which is putting the clamps on household spending.

Countering that though, Philip Lowe said he expects economic growth to continue to grow this year from 2.8 per cent to around 3 per cent, and expects inflation to rise to just over 2 per cent over the course of 2018.

On the whole the economy is softer than what the RBA would like and any rate hike now would more than likely add to that softness.


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