Happy two-year anniversary: RBA keeps rates on hold at record-low 1.5%
The Reserve Bank has kept the official interest rate on hold at a record low of 1.5 per cent.
It has now been two years since Australia went through a rate change as the central bank wills the economy through sluggish wage growth, low inflation and cooling housing markets in Sydney and Melbourne.
The last time the RBA moved the cash rate was August 2016 — a 25 basis point cut to its current level. It has remained that way for the entirety of Philip Lowe's tenure as RBA governor.
"The decision to keep the official interest rate on hold marks the two-year anniversary of the last change to the cash rate by the RBA; the longest period of interest rate stability on record," said CoreLogic head of research Tim Lawless.
"The steady rate setting has a lot to do with stubbornly low inflation, record high household debt, a slack labour market and, more recently, falling dwelling values."
Financial markets expect the cash rate will remain unchanged until January 2020.
Ernst & Young chief economist Peter Crone said the RBA needed to carefully navigate the use of low interest rates to ensure monetary policy didn't have broader impacts on the economy.
"Lower equilibrium interest rates increase the sustainable level of debt in the economy," he said.
"But if you reduce the cost of credit, does it encourage the accumulation of debt and make asset markets more sensitive to interest rate movements? The Reserve Bank is grappling with that at the moment."
More to come