Rate decision 'accommodative', says RBA

In his official statement, RBA governor Glenn Stevens said low interest rates continue to “support borrowing and spending” and reflected on growth in lending to the housing market over recent months.

“Overall, the economy is likely to be operating with a degree of spare capacity for some time yet,” Mr Stevens said.

“With very slow growth in labour costs, inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate. In such circumstances, monetary policy needs to be accommodative.”

The central bank is working closely with regulators to “assess and contain” risks arising from the housing market, Mr Stevens added, acknowledging that “dwelling prices continue to rise strongly in Sydney” with more varied trends in other locations.

Meanwhile, global asset manager Aberdeen’s senior investment manager David Choi said the move was unsurprising, adding there is “bias to ease further should more stimulus be needed”.