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RBA cash rate remains at a record low of 0.1%

DAN PETRIE

  • Target cash rate to remain at 0.1% 
  • Inflation and wage growth expected to remain modest
  • Government bond purchases to continue at $4 billion per week until at least mid-November

The Reserve Bank of Australia has maintained its record low cash rate at 0.1 per cent following the July meeting of the central bank board.

Despite economists forecasting a rise in Australia’s consumer price index (CPI)  to 3.5 per cent over the year to June, longer-term inflation is forecast to remain below the RBA’s target at 1.5 per cent.

Wage growth is also expected to remain unperturbed by the economic recovery from COVID-19 being observed across unemployment and underemployment in Australia.

To drive economic activity, the RBA will continue its government bond purchasing program at $4 billion per day until at least mid-November when short-term inflation and employment objectives are met.

Also noted in the latest meeting was the housing market which continues to experience price and credit growth amid firm demand by owner-occupier and first home buyers.

However, it is still the opinion of the board that the cash rate will remain unchanged until 2024 when more supportive monetary conditions are met.

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