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Rates on hold amid housing debt worry

Melissa Jenkins  |  03 Oct 2017Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] The central bank has kept the official cash rate on hold as it continues to worry about housing debt growing faster than wages.

Reserve Bank of Australia governor Philip Lowe said recent economic data supported the bank's view the economy will gradually grow over the coming year and showed investment from non-mining sectors of the economy was improving.

But the central bank remained concerned about the high level of housing debt in an environment where wages growth will remain low for a while yet.

"Growth in housing debt has been outpacing the slow growth in household incomes for some time," Dr Lowe said in a statement on Tuesday, announcing the official interest rate would remain on hold at 1.50 per cent.

He noted growth in investor borrowing has slowed recently following the introduction of supervisory measures by the Australian Prudential Regulation Authority.

"Housing prices have been rising briskly in some markets, while in others they have been declining," he said.

"In Sydney, where prices have increased significantly, there have been further signs that conditions are easing."

The Australian dollar fell following the RBA rate announcement, dropping below 78 US cents for the first time since mid-July and remaining at that level by 1457 AEDT.


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