The Reserve Bank has left the cash rate unchanged at 1.5 per cent, with RBA governor Philip Lowe continuing to worry about weak household spending and sluggish wages growth.
Household consumption is the source of some uncertainty, although the RBA says consumption growth picked up in late 2017. It says household income has been growing slowly and debt levels are high.
Australia’s official cash rate has now remained at a record low of 1.5 per cent for 21 months, with the central bank unwilling to move higher while concerns about weak employment and wages growth, as well as high household debt, persists.
Economists had widely expected no change in Tuesday’s rate announcement and the Australian dollar was unaffected, trading at 75.41 US cents at 1436 AEST.
The Bank’s central forecast for the Australian economy remains for growth to pick up, to average a bit above 3 per cent in 2018 and 2019.
It says business conditions are positive and non-mining business investment is increasing.
Higher levels of public infrastructure investment are also supporting the economy and stronger growth in exports is expected.
Employment has grown strongly over the past year, although growth has slowed over recent months.