Australian Central Bank Keeps Interest Rates Unchanged at 1.5pc

The Reserve Bank of Australia made a decision to keep its cash rates unchanged on Tuesday and preserved a neutral tone on policy amid signs of economic advancement along with a move towards a hawkish guidance against its peers abroad.

The interest rates of the RBA stayed at a record low of 1.5% which was already projected by economists since the bank tend to concentrate on benign inflation, sluggish growth in wages and slackening labour market. The rates were unmoved since August 2016.

RBA Governor Philip Lowe stated the job market indicators were still mixed, despite growth in employment rose in the previous month. According to Australian economist, the wage growth sustained a low position and thinks that this will continue within a certain period. Earlier this year, Gov. Lowe mentioned that he was uncertain to reduce the rate with concerns about an increase in house prices.

The indications about advancement in job sector and household and business sentiment have greatly pushed away from the remaining possibility of rate reduction. As the domestic consumption start to demonstrate signs of development while the household credit is at high levels. This means that any rate hike remains ambivalent.

Prior the policy meeting, financial markets had already estimated the least chance of adjusting the rates till mid-2018.

The neutral attitude of the Australian central bank opposed the evident reversal made by the Bank of Canada, Bank of England and the European Central Bank in relation to potential settings of policy tightening. In addition to it, the US Fed Reserve was still hawkish on the back of rate hike in June, while indicators of global growth resume to gain added strength.