Official interest rates are left on hold at 1.5 per cent for the 12th consecutive month.
Economists and commentators have widely forecast there to be no change again this month, particularly given that many banks have already been cutting their interest rates on a range of loans – effectively doing the RBA’s job for it.
While inflation is currently sitting at 1.9 per cent – just below the bank’s 2 per cent to 3 per cent target – the RBA noted at last month’s meeting that inflation had increased somewhat since 2016, reducing the risk of deflation in the economy.
However, wages have dominated economic debate in recent months, with wage growth struggling to keep pace with already low inflation. The RBA said last month that there was anecdotal evidence of an upward swing in wages to come.
“Information from liaison indicated that some employers were finding it harder to attract workers with particular skills. If this were to broaden, wage growth could increase more quickly than forecast, which would see inflationary pressures also emerge more quickly,” it said.
“However, wage and price inflation had not increased by as much as expected in other economies around the world that were already close to full employment, which raised the possibility that low inflation in Australia might also persist longer than forecast.”