RBA Board to Meet Tomorrow - No Change Expected to Interest Rates
- Author: Rita Burton Feb 08, 2017,
Feb 08, 2017, 0:43
Rates have been on hold since last August's cut.
"Today's statement, following the decision to keep the OCR steady at 1.50 per cent in February, signals that economic conditions would need to deteriorate markedly from where they now sit if there were to be a further interest rate cut", says Harley Dale.
Growth will be underpinned by further increases in resource exports, the bank said.
"The forward-looking indicators point to continued expansion in employment over the period ahead", it said, more positively.
The central bank is set to hold rates steady in anticipation of a gradual lift in growth and inflation while imbalances in the housing market remain contained, Bill Evans, an economist at Westpac, said. "In other markets, prices are declining".
"With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments".More news: Azerbaijan presented OPEC with January oil output data
"In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years", he said. Despite the hold call and a subtle upward trend in mortgage rates recently, low cost of debt should still create strong demand for housing from both owner-occupiers and investors, he said.
Analysts expect that windfall to percolate through profits, wages and tax receipts in a boon for nominal growth and an argument against further rate cuts.
Dr Lowe said the positive outlook was supported by the bank's two previous interest rate cuts in 2016 and the depreciation of the exchange rate since 2013.
He also reiterated the bank's forecasts for a gradual pick up in underlying inflation, which is now pinned at a record low of 1.5 percent.
The central bank releases a quarterly update of its growth and inflation forecasts Friday.
The RBA will meet to make it's first interest rate decision for 2017 tomorrow, and will announce it's decision at 2pm Australian Central Time.