RBA Rates at Historic Low

The reserve bank in Australia has left the official cash rate at the historic low of 1.5%. The hold was widely expected, and the market priced in virtually no chance of a change, ABC reported. The RBA last moved in August last year when it reluctantly edged rates down 0.25 percentage points as inflation slowed to just 1%, well below its target 2-3% band. However, inflation has edged up since, with the first-quarter headline CPI growing at an annualized pace of 2.1%, while the RBA’s preferred underlying rate was up 1.8%. Governor of the Reserve Bank of Australia Philip Lowe said inflation was starting to move in line with the RBA’s expectations. “A gradual further increase in underlying inflation is expected as the economy strengthens,” Lowe said. Lowe’s accompanying statement to the decision was regarded as neutral by the market, neither signifying a shift to further cuts or an increase in official interest rates. The Australian dollar only edged up marginally against the US dollar in the wake of the announcement.