The Reserve Bank of Australia kept the cash rate at a record low of 1.5 percent at its May meeting, extending record period of policy inaction and defying speculation that it may ease monetary policy following a lower-than-expected inflation rate in the first quarter of the year. Policymakers were confident 2019 headline inflation would be around 2 percent supported by the recent increase in oil prices, while the underlying inflation is projected to be around 1.75 percent in 2019 and 2 percent in 2020. The Committee added that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Interest Rate in Australia averaged 4.48 percent from 1990 until 2018, reaching an all time high of 17.50 percent in January of 1990 and a record low of 1.50 percent in August of 2016.

Interest Rate in Australia is expected to be 1.25 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Australia to stand at 1.00 in 12 months time. In the long-term, the Australia Interest Rate is projected to trend around 1.50 percent in 2020, according to our econometric models.

Australia Interest Rate
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Calendar GMT Actual Previous Consensus TEForecast
2019-02-05 03:30 AM RBA Interest Rate Decision 1.5% 1.5% 1.5% 1.5%
2019-03-05 03:30 AM RBA Interest Rate Decision 1.5% 1.5% 1.5% 1.5%
2019-04-02 03:30 AM RBA Interest Rate Decision 1.5% 1.5% 1.5% 1.5%
2019-05-07 04:30 AM RBA Interest Rate Decision 1.5% 1.5% 1.5% 1.5%
2019-05-21 01:30 AM RBA Meeting Minutes
2019-05-21 02:15 AM RBA Gov Lowe Speech
2019-06-04 04:30 AM RBA Interest Rate Decision 1.25%



Australia Leaves Monetary Policy Unchanged

The Reserve Bank of Australia kept the cash rate at a record low of 1.5 percent at its May meeting, extending record period of policy inaction and defying speculation that it may ease monetary policy following a lower-than-expected inflation rate in the first quarter of the year. Policymakers were confident 2019 headline inflation would be around 2 percent supported by the recent increase in oil prices, while the underlying inflation is projected to be around 1.75 percent in 2019 and 2 percent in 2020. The Committee added that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target.

Excerpt from the statement by the governor, Philip Lowe: 
The outlook for the global economy remains reasonable, although the risks are tilted to the downside. Growth in international trade has declined and investment intentions have softened in a number of countries. In China, the authorities have taken steps to support the economy, while addressing risks in the financial system. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up.

The central scenario is for the Australian economy to grow by around 2¾ percent in 2019 and 2020. This outlook is supported by increased investment in infrastructure and a pick-up in activity in the resources sector, partly in response to an increase in the prices of Australia's exports. The main domestic uncertainty continues to be the outlook for household consumption, which is being affected by a protracted period of low income growth and declining housing prices. Some pick-up in growth in household disposable income is expected and this should support consumption.

The Australian labour market remains strong. There has been a significant increase in employment, the vacancy rate remains high and there are reports of skills shortages in some areas. Despite these positive developments, there has been little further progress in reducing unemployment over the past six months. The unemployment rate has been broadly steady at around 5 percent over this time and is expected to remain around this level over the next year or so, before declining a little to 4¾ percent in 2021. The strong employment growth over the past year or so has led to some pick-up in wages growth, which is a welcome development. Some further lift in wages growth is expected, although this is likely to be a gradual process.

The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft and rent inflation remains low. Credit conditions for some borrowers have tightened over the past year or so. At the same time, the demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased over the past year. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.

The inflation data for the March quarter were noticeably lower than expected and suggest subdued inflationary pressures across much of the economy. Over the year, inflation was 1.3 percent and, in underlying terms, was 1.6 percent. Lower housing-related costs and a range of policy decisions affecting administered prices both contributed to this outcome. Looking forward, inflation is expected to pick up, but to do so only gradually. The central scenario is for underlying inflation to be 1¾ per cent this year, 2 percent in 2020 and a little higher after that. In headline terms, inflation is expected to be around 2 percent this year, boosted by the recent increase in petrol prices.
The board judged that it was appropriate to hold the stance of policy unchanged at this meeting. In doing so, it recognised that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings.


RBA l Rida Husna | rida@tradingeconomics.com
5/7/2019 10:40:29 AM



Australia Money Last Previous Highest Lowest Unit
Interest Rate 1.50 1.50 17.50 1.50 percent [+]
Money Supply M0 112.67 112.49 114.54 4.09 AUD Billion [+]
Money Supply M1 357.52 356.14 357.95 8.25 AUD Billion [+]
Interbank Rate 1.75 2.02 18.18 1.75 percent [+]
Money Supply M3 2150.29 2125.55 2150.29 10.19 AUD Billion [+]
Foreign Exchange Reserves 75668.00 77092.00 88457.00 1126.00 AUD Million [+]
Banks Balance Sheet 4404.79 4340.40 4404.79 322.97 AUD Billion [+]
Central Bank Balance Sheet 171127.00 168802.00 202663.00 30418.00 AUD Million [+]
Loans to Private Sector 962.06 959.58 962.06 20.21 AUD Billion [+]
Deposit Interest Rate 1.85 1.85 17.25 1.85 percent [+]
Private Debt to GDP 205.50 208.60 210.90 120.50 percent [+]


Australia Interest Rate

In Australia, interest rates decisions are taken by the Reserve Bank of Australia's Board. The official interest rate is the cash rate. The cash rate is the rate charged on overnight loans between financial intermediaries, is determined in the money market as a result of the interaction of demand for and supply of overnight funds. This page provides - Australia Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Australia Interest Rate - actual data, historical chart and calendar of releases - was last updated on May of 2019.

Actual Previous Highest Lowest Dates Unit Frequency
1.50 1.50 17.50 1.50 1990 - 2019 percent Daily




Country Last Previous
Argentina 71.57 May/19
Turkey 24.00 Apr/19
Mexico 8.25 May/19
Russia 7.75 Apr/19
South Africa 6.75 Apr/19
Brazil 6.50 May/19
India 6.00 Apr/19
Indonesia 6.00 May/19
China 4.35 Apr/19
Saudi Arabia 3.00 Apr/19
United States 2.50 May/19
Singapore 2.24 Mar/19
Canada 1.75 Apr/19
South Korea 1.75 Apr/19
Australia 1.50 May/19
United Kingdom 0.75 May/19
Euro Area 0.00 Apr/19
France 0.00 Apr/19
Germany 0.00 Apr/19
Italy 0.00 Apr/19
Netherlands 0.00 Apr/19
Spain 0.00 Apr/19
Japan -0.10 Apr/19
Switzerland -0.75 Apr/19


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