Australia's central bank decided to maintain its interest rate at a record low, as widely expected, on Tuesday.
The board of the Reserve Bank of Australia, governed by Philip Lowe, maintained the cash rate at 1.50 percent.
The interest rate has been at this level since September 2016. The bank had reduced the rate by 25-basis points each in August and May last year.
"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," the bank said in a statement.
The bank's forecasts for growth in the Australian economy are largely unchanged. The central forecast was for GDP growth to pick up and to average around 3 percent over the next few years.
The outlook for non-mining business investment has improved, with the forward-looking indicators being more positive than they have been for some time, RBA observed.
Increased public infrastructure investment is also supporting the economy. However, outlook for household consumption continues to remain a source of uncertainty.
Wage growth is forecast to remain low for a while yet, although the bank said the stronger conditions in the labor market should see some lift in wage growth over time.
In underlying terms, the bank expects inflation to remain low for some time, reflecting the slow growth in labor costs and increased competitive pressures, especially in retailing.
The bank repeated that an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
Bill Evans at Westpac, said he doesn't expect that the need will arise to raise rates in 2018. The firm's growth outlook is much flatter than central bank projections, particularly given the assessment on household incomes and wages, Evans added.
Capital Economics' economist Paul Dales said if GDP growth and underlying inflation stay below 3 percent and 2 percent respectively next year, then the RBA probably won't raise interest rates until late in 2019.
by RTT Staff Writer
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