RBA warns of overvalued AUD and Interest Rate unchanged at monetary policy meeting

November 12, 2017

This is what happened last week.

RBA warns of overvalued AUD and Interest Rate unchanged at monetary policy meeting

This article is originally referred from Orbex Market Recap

The Reserve Bank of Australia held its monetary policy meeting last week on Tuesday.

As widely expected by economists, the central bank held interest rates unchanged at the meeting at 1.50%.

The central bank cut interest rates in May and August last year.

It said that the current monetary policy was accomodative and helps to continue supporting the Australian economy.

RBA Interest Rates, November 2017: 1.50%. Source: Tradingeconomics

The central bank also did not make any major changes to its forecasts.

It was optimistic that inflation will continue to rise over time and expects the GDP to pick up as well.

“The central forecast is for GDP growth to pick up and to average around 3% over the next few years,”

the monetary policy statement said.

Business investment, public infrastructure projects and stronger labor market conditions were attributed to the central bank retaining its previous forecasts.

The central bank also said that recent inflation data showed a weaker than expected increase.

The board noted that inflation remains low largely due to weaker price pressures. Last week, the retail sales data released was flat.

Reflecting on this, the central bank said that household consumption continued to remain uncertain as it said that debt levels were also rising.

The central bank flagged the household sector as one of the largest uncertainties to the Australian economy. Australia’s housing prices, although flat over the past few months showed a modest increase.

The RBA also warned against an appreciating Australian dollar’s exchange rate. It said that this could result in slower pick up in the economy.

Original Source: Orbex Market Recap

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