Australia’s central bank kept its key interest rate unchanged at a record low for a twentieth straight month, on Tuesday.
The board of the Reserve Bank of Australia, governed by Philip Lowe, decided to maintain the cash rate at 1.50 percent. The bank had reduced the rate by 25-basis points each in August and May last year.
“Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,” the RBA said in a statement.
The bank noted that the low level of interest rates is continuing to support the Australian economy.
The RBA’s central forecast remains for faster growth in 2018. However, one continuing source of uncertainty is the outlook for household consumption, the bank said. Household income has been growing slowly and debt levels are high.
According to the RBA, inflation is likely to remain low for some time, but a gradual pick-up is expected as the economy strengthens. The central forecast is for CPI inflation to be slightly above 2 percent in 2018.
Paul Dales, an economist at Capital Economics, said the central bank has become more worried about trade tariffs and rising global bank funding costs.
Coming on top of the weakness of the housing market and wage growth, it is becoming even more likely that the RBA will keep interest rates at 1.5 percent, as it did today, until late in 2019, Dales added.