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RBA leaves cash rate unchanged at 1.5% in August 2017
Topic Started: 1 Aug 2017, 03:56 PM (1,043 Views)
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Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

Conditions in the global economy are continuing to improve. Labour markets have tightened further and above-trend growth is expected in a number of advanced economies, although uncertainties remain. Growth in the Chinese economy has picked up a little and is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. Commodity prices have generally risen recently, although Australia's terms of trade are still expected to decline over the period ahead.

Wage growth remains subdued in most countries, as does core inflation. Headline inflation rates have declined recently, largely reflecting the earlier decline in oil prices. In the United States, the Federal Reserve expects to increase interest rates further and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively and volatility remains low.

The Bank's forecasts for the Australian economy are largely unchanged. Over the next couple of years, the central forecast is for the economy to grow at an annual rate of around 3 per cent. The transition to lower levels of mining investment following the mining investment boom is almost complete, with some large LNG projects now close to completion. Business conditions have improved and capacity utilisation has increased. Some pick-up in non-mining business investment is expected. The current high level of residential construction is forecast to be maintained for some time, before gradually easing. One source of uncertainty for the domestic economy is the outlook for consumption. Retail sales have picked up recently, but slow growth in real wages and high levels of household debt are likely to constrain growth in spending.

Employment growth has been stronger over recent months, and has increased in all states. The various forward-looking indicators point to continued growth in employment over the period ahead. The unemployment rate is expected to decline a little over the next couple of years. Against this, however, wage growth remains low and this is likely to continue for a while yet.

The recent inflation data were broadly as the Bank expected. Both CPI inflation and measures of underlying inflation are running at a little under 2 per cent. Inflation is expected to pick up gradually as the economy strengthens. Higher prices for electricity and tobacco are expected to boost CPI inflation. A factor working in the other direction is increased competition from new entrants in the retail industry.

The Australian dollar has appreciated recently, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities. Investors in residential property are facing higher interest rates. There has also been some tightening of credit conditions following recent supervisory measures to address the risks associated with high and rising levels of household indebtedness. Growth in housing debt has been outpacing the slow growth in household incomes.

The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
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stinkbug
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There'll be no change for another 12 months, I think. Definitely no change between now and the end of the calendar year.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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herbie
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stinkbug
1 Aug 2017, 04:01 PM
There'll be no change for another 12 months, I think. Definitely no change between now and the end of the calendar year.
Maybe. But I tends ta hedge agin wot I sees as just maybe potentially hurtin' me ('n mine) most - As opposed ta takin' gambles on just wot I reckons I might make tha most from. (Just so all 'n sundry knows me perspective 'n all - Wif as me havin' said in tha past "I don't need ta be especially right on anything these days - Just providing I's not catastrophically wrong on nothin'.")

But anyways yeah, I'll move more cash inta tha youngs' offset accounts over tha next few weeks. (Wif at tha end of tha day, it all just really bein' family money - For mine; To be used to best advantage tha family - As best we can figures it anyways.)

Hmmm - 'N f*** tha bludgin' pollies from all tha political spectrums wot's just tryin' ta buy 'emselves votes; 'N their worthless 'consumer' economy. [So up yours too Gub Phil Lowe] - LOL
Edited by herbie, 1 Aug 2017, 05:07 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Tick Tock
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RBA will follow exactly wot Janet Yellen decides to do in December.

It aint over till 'the fat lady' lol sings. :D
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herbie
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Lukey
1 Aug 2017, 06:32 PM
RBA will follow exactly wot Janet Yellen decides to do in December.
The RBA will continue to very much act independently is my best punt.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Rufus
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Quote:
 
Former @RBAInfo board member Dr John Edwards says the neutral rate might actually be lower due to inflation.

https://twitter.com/SkyBusiness/status/892302841364205568
or on Sky business - https://twitter.com/SkyBusiness/status/892302841364205568

Edited by Rufus, 1 Aug 2017, 07:56 PM.
Take risks - if you win you will become wealthy, if you lose you will become wise
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stinkbug
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Lukey
1 Aug 2017, 06:32 PM
RBA will follow exactly wot Janet Yellen decides to do in December.

It aint over till 'the fat lady' lol sings. :D
No they won't. They'll wait until inflation actually starts to take hold and reaches or exceeds 3%. And that is still some time away. We're getting there, but slowly.

Also, Sydney property is showing signs of cooling, and Melbourne will inevitably follow. All in all, things are going OK.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Rat
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Debt free at the moment so it doesn't really matter, but I expect interest rates to be pretty much the same next year as they are now. Maybe a bit lower for P&I owner-occupier loans.
Consumer protection laws extended to small businesses. Banks not permitted to repossess due to non-monetary defaults (for example, a fall in the property value).
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Tick Tock
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stinkbug
1 Aug 2017, 08:45 PM
No they won't. They'll wait until inflation actually starts to take hold and reaches or exceeds 3%. And that is still some time away. We're getting there, but slowly.

Also, Sydney property is showing signs of cooling, and Melbourne will inevitably follow. All in all, things are going OK.
Going by CR's Melbs is nearly catching up to Sydney and will continue to do so while RBA keeps rate so low to keep economy and borrowing going.

Exact same theory The Fed has done in The U.S for nearly 10 fricken years (0.25%) and they're still only just coming out the 'Great Recession'. :wak:
Edited by Tick Tock, 2 Aug 2017, 11:03 AM.
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stinkbug
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Lukey
2 Aug 2017, 11:03 AM


Exact same theory The Fed has done in The U.S for nearly 10 fricken years (0.25%) and they're still only just coming out the 'Great Recession'. :wak:
Of course it is, but they had far worse problems than we did during the GFC.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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