The Reserve Bank of Australia (RBA) highlighted growing divergences in the domestic economy at its most recent policy meeting, but said the outlook for the second quarter remained generally positive following a slow start to the year.
Recent economic data indicate that the June quarter “had been generally positive” amid rebounding consumption growth. However, this segment of the economy remained generally subdued given the record level of household debt bearing down on consumers.
Gross domestic product (GDP) expanded just 0.3% in the March quarter.
Officials voted to keep the overnight rate at a record low of 1.5% following the July 4 meeting. Policy has remained on hold since last August, when rates were cut by 25 basis points.
Analysts are divided about when policymakers might signal for higher rates. Surging house prices and record debt levels suggest Australia is among the most vulnerable nations to rate increases.
However, the latest budget forecast calls for annual growth of 2.75% in fiscal 2017-18. Inflation is also expected to reach 2%. These figures
Last week, the Bank of Canada (BOC) became just the second major central bank in the advanced industrialized world to raise interest rates, but that came after nearly seven years of dovish posturing.
The RBA’s next Board meeting is scheduled for August 1. No shift in policy is expected.