Reserve Bank of Australia keeps policy steady, as widely expected

The Reserve Bank of Australia (RBA) at its February monetary policy meeting held today, the first one for this year, left the official cash rate (OCR) unchanged at a record low of 1.50 percent for the twenty-seventh straight meeting.

The RBA statement read: “The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. 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.”

With regard to the housing markets and inflation level, the RBA added: “The housing markets in Sydney and Melbourne are going through a period of adjustment, after an earlier large run-up in prices. Conditions have weakened further in both markets and rent inflation remains low. 

“Underlying inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual and to take a little longer than earlier expected. The central scenario is for underlying inflation to be 2 percent this year and 2¼ percent in 2020. Headline inflation is expected to decline in the near term because of lower petrol prices.”

On the exchange rate value: “The Australian dollar has remained within the narrow range of recent times. The terms of trade have increased over the past couple of years, but are expected to decline over time.”