RBA hold its hand at the start of 2018 – UOB

Researchers at UOB Group assessed the recent decision by the RBA to leave unchanged its monetary conditions.

Key Quotes

“At its first meeting of 2018, the Reserve Bank of Australia (RBA) left its official cash rate (OCR) unchanged at a record low of 1.5%. Today’s decision marks the 18th consecutive month that the OCR has been left at this historically low setting. The last time we saw this prolonged period of interest rate stability was back in 2013/14 when the cash rate was left on hold for 17 consecutive months”.

“The concluding paragraph of the RBA’s accompanying statement was slightly different from the one in December, with the RBA adding the sentence: “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”.

“The rest of the accompanying statement contained little surprises, though the paragraphs on growth, employment and inflation saw some slight tweaks”.

“We remain of the view that persistently weak inflation is likely to stay the RBA’s hand on rates until at least the end of 2018. Nonetheless, the RBA’s Statement on Monetary Policy this Friday (9 February) will contain further details, including the Bank’s near-term forecasts. RBA Governor Philip Lowe is scheduled to deliver a dinner speech in Sydney on Thursday (8 February)”.