Finance Finance News Reserve Bank leaves the cash rate alone

Reserve Bank leaves the cash rate alone

This was the first decision of the board with Governor Lowe in charge. Photo: AAP
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The Reserve Bank has held the official interest rate at 1.5 per cent at its October board meeting on Tuesday.

The RBA has not changed the cash rate since it lowered it by 25 basis points in May and August.

The decision was widely expected. All 33 experts and economists surveyed by before the result predicted it correctly.

The rate remains at the lowest rate in Australian history, and reflects challenging global economic conditions.

“The global economy is continuing to grow, at a lower than average pace,” Governor Philip Lowe wrote in his official statement.

The Governor noted that the Australian economy is also growing at a “moderate” rate. He was optimistic about the shift from mining and manufacturing to other segments of growth, and said household and business sentiment “remain above average”.

But Governor Lowe said there were areas of softness. Household consumptions is slowing a little, growth in full-time employment has been “subdued”, and inflation “remains quite low”.

The RBA uses the official cash rate to push inflation (measured by the Consumer Price Index) up or down in order to meet its medium-term inflation target of 2-3 per cent.

The headline inflation figure was 1.0 per cent for April-June, which is below the central bank’s.

The RBA has cut the cash rate by 325 basis points since the downward trend began in November 2011.

This was the first decision handed down by the RBA board with Governor Lowe at its head. The former governor, Glenn Stevens, retired in September.

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