RBA Leaves Interest Rates On Hold
By business reporter Michael Janda
Despite a significant level of anticipation the Reserve Bank would cut interest rates this month, it has kept them on hold for the 30th consecutive meeting.
The record-low cash rate of 1.5 per cent has been at that level since the last move in August 2016, although money market traders do not expect it to stay there much longer.
The market is seeing a better than even chance of rates falling in June, with the bulk of analysts expecting two rate cuts from the RBA, probably before the end of this year.
Markets had priced in about a 40 per cent chance of the bank moving rates at today's board meeting -- odds that had peaked closer to 70 per cent in recent weeks.
Betting on a rate cut has been boosted by weakness in two key datasets released over the past two months -- GDP and inflation.
Australia's economy grew just 0.2 per cent in the last quarter of last year, an annual growth rate of 2.3 per cent.
Bureau of Statistics figures show consumer prices remained unchanged over the first three months of this year, for an annual inflation rate of 1.4 per cent when the most volatile price changes were removed.
That inflation rate is well below both the Reserve Bank's forecasts and its 2-3 per cent target range, and caused a massive surge in betting on a May rate cut.
However, the bank recently stated it was looking to a rise in unemployment as well as low inflation to trigger a move down from what are already record-low interest rates.
The most recent figures show trend unemployment holding steady at 5 per cent, although fresh jobs data for April will be released next week.
More to come.