Reserve Bank Keeps Official Rates at 1.5%

For the 12th consecutive month the RBA has kept rates at 1.5%.

Economists had widely forecast there to be no change again this month, primarily because many banks were doing the RBA's job for it by cutting their interest rates on a range of loans.

While inflation is currently sitting at 1.9 per cent – just below the bank’s 2 per cent to 3 per cent target – the RBA noted last month that inflation had increased marginally since 2016, reducing the risk of deflation in the economy.

WIth wages having dominated economic debate in recent months, and wage growth struggling to keep pace with already low inflation. The RBA said last month that there was anecdotal evidence of an upward swing in wages to come.

Some employers have advised they were finding it harder to attract workers with particular skills. If this were to widen, wage growth could increase more quickly than forecast, which would see inflationary pressures also emerge more quickly.

However, wage and price inflation had not increased by as much as expected in other economies around the world that were already close to full employment, which raised the possibility that low inflation in Australia might also persist longer than forecast.