- CANBERRA, AAP – The minutes of the Reserve Bank’s April board meeting stuck to the script of maintaining low interest rates until its goals of low unemployment and an inflation rate in line with its target are met.That meeting left the cash rate, and the rates on the central bank’s toolkit of policies, unchanged at a record low 0.1 per cent.”The board remained committed to doing what it reasonably could to support the Australian economy, and would maintain highly supportive monetary conditions until its goals were achieved,” the minutes sayThe board reiterated it will not increase the cash rate until actual inflation is sustainably within the two to three per cent target range.
This will need wages growth to be materially higher that it is currently, which will require significant gains in employment and a return to a tight labour market.
“The board does not expect these conditions to be met until 2024 at the earliest,” the minutes released on Tuesday say.
It again said a move to negative interest rates is “extraordinarily unlikely”.
Since that meeting, the unemployment rate has fell even further – to 5.6 per cent as of March from 5.8 per cent the previous month.
In February, the RBA did forecast the jobless rate being 6.5 per cent at the end of June.
Even so, RBA governor Philip Lowe wants to see a jobless rate in the low fours.
Meanwhile, confidence among Australians barely changed in the past week as the potential benefits from the unemployment rate were offset by concern over the COVID-19 vaccine rollout.
The weekly ANZ-Roy Morgan consumer confidence index eased just 0.1 per cent after a lofty 5.9 per cent rise in the previous week, remaining above its long-run average.
Compared to a year ago when the economy was entering the depths of recession, confidence was 35.4 per cent higher.
ANZ head of Australian economics David Plank was surprised the drop in the unemployment in last week’s labour force data didn’t have more of a positive impact on confidence.
“Perhaps the good news on employment offset any fallout from the vaccine disappointment,” Mr Plank said.
A revamped vaccination rollout plan is expected to be released on Thursday when the national cabinet meets for a second time this week after the previous strategy was thrown into disarray by restrictions being put on the AstraZeneca treatment.
The AstraZeneca vaccine is now only recommended for people over 50 after cases of blood-clotting – both overseas and in Australia – in younger people, who have to wait for their Pfizer jabs later in the year.
Consumer confidence is a key pointer to future household spending.
Preliminary retail trade figures for March are due on Wednesday, which are expected to show spending grew by a solid 1.0 per cent in the month, rebounding from the 0.8 per cent decline in February.
This expected bounce in spending comes after the snap COVID-19 lockdowns in Victoria and Western Australia weighed on the February result.
RBA sticks to script of low rate outlook
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