RBA keeps cash rate on hold at 2% for fifth month in a row

The Reserve Bank of Australia has kept the official cash rate at 2% for the month of October.

This is the fifth month in a row where the cash rate has remained unchanged. 

The RBA last cut the official cash rate in May by 25 basis points. 

Today’s result was “almost universally expected”, according to Michael McCarthy, the chief market strategist for CMC Markets. 

“However, participants will eagerly scour the statement for clues on international outlook,” McCarthy said. 

RBA governor Glenn Stevens said in a statement the global economy is expanding at a moderate pace, with softening conditions in China and east Asia, but also stronger growth in the US. 

“The board today judged that leaving the cash rate unchanged was appropriate at this meeting,” Stevens said.

“Further information on economic and financial conditions to be received over the period ahead will inform the board’s ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.” 

Stevens pointed out that all the available information suggests that moderate expansion in the Australian economy will likely continue.

“While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year,” he said.

“Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.”