Unchanged since August 2016, the Reserve Bank of Australia (RBA) have held the cash rate at 1.50 per cent in their June 2017 Board meeting.
There has only been one cash rate change in the 2016-17 financial year, and it is not expected to move for some time still.
In a statement made by Governor Philip Lowe, the decision was widely attributed to our post-mining boom economy, mixed housing conditions across the country, and slow wage growth compared to inflation levels.
The transition into lower levels of mining investment are “almost complete”, said Governor Lowe.
“Business conditions have improved and capacity utilisation has increased. Business investment has picked up in those parts of the country not directly affected by the decline in mining investment.”
He also pointed towards the varying housing market conditions in Australia as a deciding factor, stating that “prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease…in 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 are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes.”
“Lenders have also announced increases in mortgage rates, particularly those paid by investors and on interest-only loans,” said Governor Lowe.
RateCity recently reported on how the cost of living in Australia is increasing more than we’re seeing put into our pockets. Governor Philip Lowe addressed this growing concern, admitting that “indicators of the labour market remain mixed.”
“Wage growth remains low and this is likely to continue for a while yet. Inflation is expected to increase gradually as the economy strengthens. Slow growth in real wages is restraining growth in household consumption,”
“Looking forward, economic growth is still expected to increase gradually over the next couple of years to a little above 3 per cent,” said Governor Lowe.