The Reserve Bank of Australia (RBA) said it will keep rates steady at its first policy meeting of 2017. The bank is downplaying the country’s recent soft growth patch as a temporary hiccup that would yield to a healthy 3-percent growth rate in time.
The RBA’s optimism lifted the local currency to $0.7662 AUD=D4 as markets expanded the odds on further policy easing.
Australia’s central bank also kept rates at a record low (1.5 percent) for the seventh month in a row, following easings in August and May last year. Governor Philip Lowe said: "The Bank's central scenario remains for economic growth to be around 3 percent over the next couple of years.”
Lowe highlighted that Australia's key commodity export prices had risen dramatically in recent months, which endowed the country with its largest ever trade surplus.
A great deal of economists strongly believe that these numbers will have a tangible effect on everyday Australians, with profits, wages and tax receipts all predicted to be affected. Furthermore house prices in Sydney and Melbourne have grown rapidly in recent months, prompted by a renewed surge in borrowing for investment properties.
Following an RBA meeting at the close of 2017, it was revealed that the board was aware of balancing the benefits of easy policy against the risks of inspiring a borrowing frenzy by Australian households.