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RBA on hold, still concerned by rising $A

Melissa Jenkins  |  05 Sep 2017Text size  Decrease  Increase  |  

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MELBOURNE - [AAP] The Reserve Bank has kept the official cash rate on hold at 1.5 per cent and repeated its concern that an appreciating Australian dollar could slow economic growth.

RBA governor Philip Lowe said a higher exchange rate is weighing on the outlook for economic output and employment, and appreciation would likely result in a slower pick up in economic activity and inflation than currently forecast.

The Australian dollar dipped in the minutes following the RBA's rates announcement to 79.5 US cents, though recovered to be trading at 79.62 US cents at 1500 AEST.

Dr Lowe repeated his remarks from his August statement that wage growth remains low, though he forecast an improvement.

"Wage growth remains low. This is likely to continue for a while yet, although stronger conditions in the labour market should see some lift in wages growth over time," he said in his statement on Tuesday.

"Inflation also remains low and is expected to pick up gradually as the economy strengthens."

Dr Lowe also repeated his comments that there were indications the housing market was cooling, and singled out Sydney.

"Housing prices have been rising briskly in some markets, although there are signs that conditions are easing, especially in Sydney," he said.

"In some other markets, prices are declining."

 

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