Reserve Bank leaves official cash rate on hold in October

Reserve Bank leaves official cash rate on hold in October

The Reserve Bank has decided to again leave official interest rates on hold over October at the record low 1.5%. The Bank will continue to take a wait and see approach and assess the impact on the economy of the recent interest rate cut to determine if further are required.

General comments

Latest economic data remains mixed and largely directionless. The RBA is waiting for the September quarter inflation rate data, due to be released on October 26.

Although the national seasonally-adjusted jobless rate fell to a new three-year low of 5.6%, the economy is still shedding full-time workers. Recent jobs growth has been restricted to part-time work.

Home building approvals remain good despite recent signs that the peak of the residential planned construction boom may have passed.

Recent retail sales activity is relatively flat. The Aussie dollar is still higher than desirable, although the share market appears to be consolidating recent gains.

The Bank however will be increasingly alert to a resurgence in house prices growth generated by lower mortgage rates.

Concerns remain over a resurgence in house prices, an overall steady economic performance, and reasonable inflation rates. The Reserve Bank therefore is now likely to leave official rates on hold until next year.