October Update: RBA keeps cash rate on hold

The RBA met yesterday and decided to keep the cash rate on hold at 1.5%.

For over 2 years now the cash rate has remained on hold and most analysts expect this to be the case for another 2 years. There is also some talk that the RBA may even cut interest rates.

Bullet points from meeting notes which all look positive:

• Global economy is still expanding above trend
• Global unemployment rates are low
• Global inflation still low although has increased slightly due to oil price and wage growth
• US dollar has appreciated
• Australia’s economy grew over the past year with an increase in GDP of 3.4%
• Business conditions across Australia are positive and non-mining sector is improving
• Household debt is still of concern as wages is not growing at the same rate
• Australian unemployment is the lowest in 6 years at 5.3% and that is expected to go to 5%
• The is strong competition from banks for high quality credit customers