Rate un­moved as RBA waits

Mercury (Hobart) - - NEWS - JOHN DAGGE

THE Re­serve Bank of Aus­tralia has held the cash rate at a record low 0.75 per cent. The RBA has paused rate cuts so it can judge the eco­nomic im­pact of al­ready low bor­row­ing costs and govern­ment tax hand­outs.

THE Re­serve Bank has kept the door to fur­ther rate cuts open as economists say the next slash could come next month.

The na­tion’s cen­tral bank down­graded its growth fore­cast for this year af­ter keep­ing the cash rate on hold at its an­nual Mel­bourne Cup meet­ing yes­ter­day.

The de­ci­sion to stay on hold fol­lows the RBA de­liv­er­ing three quick-fire cuts this year, in­clud­ing back-to-back re­duc­tions of 0.25 per­cent­age points each in June and July.

That has taken the cash rate to a record low of 0.75 per cent.

The RBA has held fire to as­sesses whether lower lend­ing rates and fat­ter tax re­turns are buoy­ing the econ­omy, but gov­er­nor Philip Lowe said it was ready to cut again.

“Given global de­vel­op­ments and the ev­i­dence of the spare ca­pac­ity in the Aus­tralian econ­omy, it is rea­son­able to ex­pect that an ex­tended pe­riod of low in­ter­est rates will be re­quired in Aus­tralia to reach full em­ploy­ment and achieve the in­fla­tion tar­get,” Dr Lowe said.

He said the board would con­tinue to mon­i­tor de­vel­op­ments, in­clud­ing in the labour mar­ket, and is pre­pared to ease mone­tary pol­icy fur­ther to sup­port growth, em­ploy­ment and in­fla­tion tar­gets.

The RBA down­graded its growth fore­cast for the Aus­tralian econ­omy for 2019 from 2.5 per cent to 2.25 per cent.

A year ago it was ex­pect­ing growth to clock in at 3.25 per cent.

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