Official interest rates were left on hold at 1.5 per cent at today’s meeting, the 11th consecutive month of no change.
There had been speculation in the mainstream media that interest rates would need to rise sooner rather than later, particularly as house prices in Sydney, Melbourne and Canberra posted double-digit growth year-on-year, according to the CoreLogic Hedonic Home Value Index.
However, with inflation sitting below the RBA’s target of 2 per cent to 3 per cent (at 1.9 per cent), combined with ongoing concerns about sluggish wage growth (also at 1.9 per cent) and a stubbornly strong Australian dollar sitting just shy of 80 US cents, the RBA board had no choice but to leave rates on hold.
Indeed, at a recent speech at the Anika Foundation Luncheon in Sydney, RBA Governor Philip Lowe said that “the persistent slow growth in wages is creating a challenge for central banks”.
All 35 panellists on the finder.com.au RBA survey, which included senior economists, property professionals and university academics, had forecast the interest rate to remain on hold.