Reserve Bank keeps rates on hold for 19th consecutive month

The Reserve Bank has kept interest rates on hold at the historic low of 1.5 per cent for the 19th consecutive meeting.

The decision was widely expected with the market pricing in a zero chance of rates moving.

The RBA last moved in August 2016 when it made a cut to the current “emergency” setting.

The bank has been balancing its relatively optimistic forecast for economic growth against high household debt and weak wages growth.

While the bank has consistently said the next move will be up, the market has not priced in a full 25 basis point rise until mid-2019.

The RBA’s case for a rise has been supported by underlying inflation finally touching the bottom of its 2-to-3 per cent target band, but a cooling jobs market has recently emerged as problem that may frustrate the move to more “normal” rates.

The RBA appears to be marginally more upbeat on the economy saying GDP growth should be “a bit above 3 per cent” in 2018 and 2019.