Reserve Bank of Australia keeps rates of hold

Economy - Mohit Shah - Mar 07,2017

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reserve bank of australia keeps rates of hold

After its second board meeting of the year, the Reserve Bank of Australia has announced a hold on its rates amid opposing signals over the strength of the local economy.

On Tuesday, the Reserve Bank of Australia held rates at 1.50 percent, which is reported as a record low value. The bank also signaled that economic conditions were leveled with its growth targets and inflation.

Central bank governor, Philip Lowe, offered a statement covering a precise valuation of the global economy. He said, over the last few months the conditions have gotten better, with an upgrade of business and consumer confidence.

Mr. Lowe further added that Australia’s national income has surged due to higher commodity prices.

Prior to the announcement of the RBA, the Australian dollar was soaring at US76.05c. After the release of the statement, the currency settled higher at US76.25c [3.45pm (AEDT)].

Presently, inflation, labour market, and wage growth are seen to skid continuously at a time when growth has recovered, consumer confidence hover and housing prices endure to rise. This is one of the prime reasons regarding decisions to hold the rates at current levels.

Moreover, this move keeps the balance of risks well composed for the RBA, as economists are divided in order to predict the central bank’s future action.

The most significant news focused on the local economic growth. The RBA processed the latest GDP report highlighting the December quarter, which offered a positive expansion of 1.1 percent after suffering a 0.5 per cent contraction measured in Q3.

Mr. Lowe also pointed out that the rise in exports and non-mining business investment have been quite significant in the previous year. He added, although consumption growth was stronger by the year end, household income growth stayed low.