The Reserve Bank decided to keep the official interest rate on hold at 3% today, it announced this afternoon, in line with economists’ expectations.
Reserve Bank governor Glenn Stevens said in a statement the evidence suggests moderate growth in private consumption spending is occurring, but a return to strong growth is “unlikely”.
“While the near-term outlook for investment outside the resources sector is relatively subdued, a modest increase is likely to begin over the next year.”
“Dwelling investment is slowly increasing, with rising dwelling prices and high rental yields. Exports of natural resources are strengthening. Public spending, in contrast, is forecast to be constrained.”
With inflation on target, labour costs contained and higher efficiency among business, the RBA said inflation will “be consistent with the target over the next one to two years”.
As a result, it said an “accommodative stance of monetary policy is appropriate”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
