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RBA holds cash rate at 1.5pc for 31st month

AAP  |  05 Mar 2019Text size  Decrease  Increase  |  
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The Reserve Bank has kept the official cash rate at a record low of 1.5 per cent despite noting Australian economic growth probably slowed in the second half of 2018.

The RBA, whose decision at Tuesday's March board meeting means the cash rate has not moved in 31 months, said it still expected the economy to grow by about 3.0 per cent in 2019 but that faltering property markets and weak wages growth were still concerns.

"The growth outlook is being supported by rising business investment, higher levels of spending on public infrastructure and increased employment," governor Philip Lowe said in his monetary policy decision statement.

"The main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities."

Australia's current account deficit narrowed 33 per cent in the three months to December on higher commodity prices.

But in seasonally adjusted terms, the balance on goods and services of $1.24 billion ws down from $2.02 billion - which is expected to drag GDP down 0.2 percentage points.

Economists expect GDP data due Wednesday to show growth of about 0.4 per cent in the fourth quarter, and 2.6 per cent over the full year.

That's below the RBA's 2.75 per cent forecast, with many economists tipping the central bank will be forced to cut the cash rate at least once in 2019.

Retail trade also hit its lowest level since 2012 in February, on reduced consumer spending, according to figures from industry index Ai Group.

This showed retail trade slipped another 2.9 points to 39.9, the lowest in more than four years.

The cash rate, which reflects what the central bank charges commercial banks on overnight loans and influences all other interest rates, was last cut in August 2016 and hasn't been hiked since November 2010.

 

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