2min read
PREVIOUS ARTICLE Nine's Comm Games accreditatio... NEXT ARTICLE Aust shares lower but avoid US...

Interest rates: The waiting game continuesReserve Bank Board meeting
The Reserve Bank has left the cash rate at a record low of 1.50 per cent for the 20th straight month (18th meeting) – the longest period of stable cash rates.
What changed since the last meeting?
Global sharemarkets fell sharply over the past month on fears of a US-China trade war.
The Australian economy grew by 0.4 per cent in the December quarter.
Consumers trimmed savings in order to keep spending in the quarter.
The number of home loans fell 1.1 per cent in January – the fourth fall in five months.
The US Federal Reserve lifted the federal funds rate by a quarter of a percent.
The rolling annual budget deficit has narrowed to a 9-year low of $18.6 billion or 1.0 per cent of GDP
Employment rose by 17,500 in February. A record 420,700 jobs were created over the past year.
The Aussie dollar eased to the US76-77 cent range over the past month.
Business conditions hit record highs in February.
Annual credit growth held at a 3½-year low of 4.9 per cent.
M3 money supply rose by 3.8 per cent over the year – the slowest pace in 25 years.
Household wealth hit record highs at the end of December.
Population grew by 1.63 per cent over the year to September.
Capital city home prices fell by 0.2 per cent in March.
The AiGroup manufacturing index hit record highs in March.
The Reserve Bank assessment
The Reserve Bank Board continues to believe that the economy will gather pace over the year and that the inflation rate will slowly lift into the 2-3 per cent target band. But there is nothing in the latest statement that suggests an imminent change in interest rates in either direction. And clearly that is a mark of a healthy economy – it doesn’t need speeding up or slowing down. There is only a passing reference to US trade policy and equity market volatility. There is also reference to the lift to short-term interest rates like 90-day bank bills.
Perspectives on interest rates
The Reserve Bank has left the cash rate at 1.50 per cent. The previous move was a rate cut in August 2016 (25 basis points). There have now been 12 rate cuts since November 2011, with the Reserve Bank cutting rates from 4.75 per cent to 1.50 per cent.
The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 – a total of 1.75 percentage points, from 3.00 per cent to 4.75 per cent.
What are the implications of today’s decision?
The Reserve Bank remains positive but an extended period of stable rates is likely. The next move in rates is up, but not until later in 2018. 
Published by Craig James, Chief Economist, CommSec