Rate unmoved as RBA waits

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.