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Australian central bank holds cash rate for longest period on record

The Reserve Bank of Australia's board kept the cash rate unchanged for a 21st consecutive meeting, in an expected move marking the longest period of stability on record.

The Australian dollar was little changed after the rate was left at 1.50%, losing 0.2% to 75.15 U.S. cents.

Inflation is likely to remain low for some time, the bank said, reflecting low growth in labor costs and strong competition in retailing. The recent inflation data was in line with the central bank's expectations, with both consumer price index and underlying inflation running marginally below 2%. Consumer price index inflation is expected to be slightly above 2% in 2018.

"We were looking for a nod to higher underlying inflation, but the Bank's narrative was little changed. We still look for a marginal upgrade to the 2018 outlook to 2% a year in Friday's Statement on Monetary Policy," TD Securities said in a note.

Wages growth remains low, in spite of the improving labor market, and is likely to remain that way for a while, the bank said.

"Consistent with this, the rate of wages growth appears to have troughed and there are reports that some employers are finding it more difficult to hire workers with the necessary skills," it said.

The bank forecasts economic growth to pick up to a bit above 3% in 2018 and 2019, buoyed by stronger growth in exports and high levels of public infrastructure investment, although the outlook for household consumption is a continuing source of uncertainty.