True to economists’ expectations, the RBA has again left the cash rate untouched during September.
In his monthly statement, Governor Glenn Stevens sighted the decision to leave rates on hold was heavily influenced by the high Australian dollar and increasing unemployment.
“Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over recent months as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. The increase in dwelling prices continues. The exchange rate, on the other hand, remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy,” Stevens said.
The RBA has repeatedly stressed the likelihood of “a period” of low and stable interest rates since it met February this year, noting
the tepid improvement in investment outside the resource sector, alongside significant increases in house prices and a growing pipeline of home building.
The cash rate has now stayed at 2.5 per cent for 13 months, the longest period of interest rate stability since 2006.