RBA holds rates steady at first meeting of the year
The Reserve Bank board has held official interest rates at a record low 0.1 per cent at its first meeting of the year.
Governor Philip Lowe, who will make his first-ever address to the National Press Club in Canberra on Wednesday to outline the bank’s expectations for the economy, confirmed on Tuesday afternoon there would be no change in the RBA’s key policy setting this month.
Governor Philip Lowe will make his first-ever address to the National Press Club in Canberra on Wednesday to outline the bank’s expectations for the economy.Credit:Alex Ellinghausen
The RBA cut the cash rate to 0.1 per cent in November while embarking on a quantitative easing program that included the purchase of $100 billion of government bonds and a cut in the interest rate it charged commercial banks under its term funding facility program.
The bank’s decision on Tuesday was not unexpected, with markets forecasting interest rates to remain around their current level for up to three years.
But a sharp lift in house prices and signs the jobs market is improving have lifted expectations the RBA may change its quantitative easing program.
Data from the Australian Bureau of Statistics on Tuesday showed a 1.3 per cent increase in the number of payroll jobs across the country over the fortnight to January 16.
Despite that increase, the number of jobs on business payrolls is still a full percentage point down on the same point last year before the advent of the coronavirus. They are 4.3 per cent down on mid-March, just as much of the country went into lockdown.
ABS’s head of labour statistics, Bjorn Jarvis, said payrolls had climbed in all states and territories.
“The challenge with new data is to be able to distinguish between changes in the economy and regular seasonal changes. Annual comparisons are a useful way of accounting for seasonality, until we have enough data to produce seasonally adjusted figures,” he said.
The accommodation (minus 14.7 per cent), IT (minus 13.1 per cent) and education and training sectors (minus 13.8 per cent) are still well down on payroll job numbers since mid-March.
More to come
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.