While the rain fell at Flemington this week and Cross Counter claimed the Melbourne Cup, the Reserve Bank kept the official cash rate at 1.5 per cent at its Cup Day meeting.
It was a decidedly more upbeat RBA, who revised their forecasts for economic growth in 2018 and 2019 up and kept rates low amid falling house prices and low inflation.
“The central scenario is for GDP growth to average around 3.5 per cent over these two years, before slowing in 2020 due to slower growth in exports of resources,” RBA governor Philip Lowe said.
“Business conditions are positive and non-mining business investment is expected to increase.”
The RBA says it expects inflation to remain low with only a gradual rise.
While more up beat on the economy as a whole, the central bank hasn’t changed its view on the housing market and isn’t showing concern over falling prices.
“Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low,” Dr Lowe said.
“Growth in credit extended to owner-occupiers has eased but remains robust, while demand by investors has slowed noticeably as the dynamics of the housing market have changed.
“Credit conditions are tighter than they have been for some time, although mortgage rates remain low.”