Reserve Bank keeps interest rates on hold at record-low 1.5pc

The Reserve Bank of Australia has left official interest rates on hold as expected after its monthly board meeting. RBA Governor Philip Lowe said the central bank decided to leave the cash rate unchanged at a record low 1.5 per cent.

The decision to leave rates unchanged for a 13th consecutive meeting was widely expected by financial markets. A Bloomberg survey showed all of the economists polled expected rates to remain on hold for the rest of the year.

However, market pricing has a hike of 25 basis points priced in as a near certainty within the next 12 months.

Recent economic data in Australia has been mixed, with strong employment data offsetting disappointing retail sales and lacklustre economic growth.

Strong growth in full-time employment this year and upbeat comments from Governor Lowe have economists tipping a greater chance of hikes than cuts.

In recent weeks, ANZ and NAB have predicted two rate hikes next year, while JPMorgan abandoned its earlier predictions of two more cuts.

The RBA has continued to hold rates steady despite interest rate hikes from the US Federal Reserve and the Bank of Canada this year.

It also comes after the Australian dollar hit a two-year high of US81.25 cents last month.

– October 2017