The Reserve Bank has kept the official cash rate at a record low and reiterated its economic growth forecasts, but is keeping a close eye on the stumbling east coast housing markets.
The decision at Tuesday’s December board meeting means the cash rate has been on hold at 1.5 per cent for two whole calendar years, last moving in August 2016.
The RBA said it still expects the economy to grow by 3.5 per cent this year and next, but Governor Philip Lowe hinted at concerns over the potential impact of falling Sydney and Melbourne house prices.
‘Credit conditions for some borrowers are tighter than they have been for some time, with some lenders having a reduced appetite to lend,’ Dr Lowe said in a statement.
That could have a negative effect on household consumption when the September quarter GDP figures are released on Wednesday.
Dr Lowe also noted ‘some signs of a slowdown in global trade, partly stemming from ongoing trade tensions’ between the US and China.
The RBA has repeatedly signalled the cash rate is not likely to change for some time.
The Australian dollar kicked a little higher following the rate announcement, rising from 73.58 US cents at 1430 AEDT to 73.75 US cents by 1513 AEDT.