trending Market Intelligence /marketintelligence/en/news-insights/trending/WhI4CFxeLddKAcYhZw1XKQ2 content esgSubNav
In This List

Australian central bank holds rate at 1%

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Australian central bank holds rate at 1%

The Reserve Bank of Australia maintained its cash rate at 1% and said it expects interest rates to remain low for an extended period to help reduce unemployment and assure progress in boosting inflation.

The Australian economy grew at a slower-than-expected pace in the first half as household consumption faltered, the RBA said, but economic growth is projected to strengthen gradually to be around trend over the next few years. The central bank had said in its last monetary statement in August that it expected the economy to grow by about 2.5% over 2019 and 2.75% the year after.

Inflation pressures remain subdued, the RBA noted, with prices expected to rise at both headline and underlying terms of a little under 2% over 2020 and slightly above 2% in 2021. Meanwhile, the unemployment rate has held steady at 5.2% in recent months and wage growth remains weak.

The central bank also saw further signs of a turnaround in housing markets, but noted that new dwelling activity has weakened.

"The RBA sounded a touch more optimistic when it left interest rates on hold today, but we still think that further rate cuts over the coming months are likely," said Marcel Thieliant, senior Australia and New Zealand economist at Capital Economics.