May 03, 2018

RBA locks in interest rate decision for May

The Reserve Bank of Australia has announced its decision on the official cash rate for May after it its monthly board meeting.

As largely anticipated, the RBA has again decided to keep the official cash rate at the record low of 1.50 per cent.

This marks the 20th consecutive month since the cash rate moved, when the RBA dropped the official interest rate to its current level. AMP chief economist Shane Oliver said strong business conditions and employment, rising non-mining investment, strong global growth and the RBA’s own forecasts argue against a cut.

“[On the other hand], low inflation and wages growth, risks around the outlook for consumer spending, the slowing Sydney and Melbourne property markets and tightening bank landing standards argue against a hike. So the RBA is likely to remain on hold,” said Mr Oliver.

ABC Bullion chief economist Jordan Eliseo also predicted that the RBA would keep rates steady at 1.50 per cent.

“Inflation is soft, property prices are easing, and employment growth looks to be slowing down, so we are still of a view that the next move will be a cut, though this will take some time to come through,” said Mr Eliseo.

The national survey of 2010 people shows almost two thirds (65 per cent) of Australians are clinging to the home ownership dream.

Sunsuper chief economist Brian Parker said there was nothing in the current data to force the RBA to adjust rates one way or the other.

“Still enough labour market slack to keep them from raising rates, and they've made it clear they would be very reluctant to ease at this point,” said Mr Parker.

By: Miranda Brownlee

This story first appeared on SMSF Adviser May 01, 2018