In their meeting today, the RBA announced that they are keeping interest rates at their record low of 2%. Interest rates have been at this level since mid 2015. This decision was broadly expected with 87% of psychics predicting that rates would remain on hold. Of the remaining 13%, that didn’t predict that rates would remain on hold, 6% said it would fall, 4% expected a rise, and 3% declined to comment citing that predicting interest rates would open the world up to evil spirits (such as a treasurer who’s got no idea what’s going on?).
The main driving force of constant low rates has been a steady but not strongly growing economy. Inflation appears to be under control and wage growth is low (noticed that you’re not getting big pay rises??)
At risk is the Australian Dollar – a continued rise of the dollar may have negative effects on the economy may cause the RBA to consider a further loosening of monetary policy (that means drop interest rates). This isn’t considered to be a current risk, however over time it may be.
So what does all this mean to you at home? Not much – just chill out and have another glass of wine.