As predicted by the majority of experts, the board decided to leave the official cash rate at 2 per cent, where it has been since May 2015.
Twenty-seven of the 28 economists and commentators surveyed by comparison website finder.com.au accurately predicted today’s result. They cited a robust labour market, a recovering Australian dollar and an imminent federal budget among the reasons behind why the cash rate would stay put.
Greater Bank CEO Scott Morgan said there were no obvious economic drivers for a rate change at the moment.
“The RBA will wait for more definitive evidence either way before making a change,” Mr Morgan said, adding, “Although other factors remain at play, such as the upcoming election, the actions of overseas central banks and worries about the Australian dollar… Business and consumer confidence is key.”
Shane Garrett, senior economist for the Housing Industry Association, said the current balance between inflation, growth and exchange rate conditions did “not warrant an immediate interest rate reduction”.
Bank of Sydney’s Steven Pambris said any move on rates by the RBA would “lack prudence”, given that the budget was set to be unveiled on Tuesday night.
As for the prospects of a rate movement beyond May, 55 per cent of the 22 experts who answered this question believe a cut is on the cards in 2016, while 45 per cent expect no movement until next year. Only three experts predicted a rate rise this year.