Australian Central Bank Keeps Rate Unchanged

Australia’s central bank decided to maintain its current policy settings, as widely expected, on Tuesday.

The policy board of the Reserve Bank of Australia headed by Governor Philip Lowe decided to leave its cash rate unchanged at a record low of 0.10 percent.

The central bank retained the target yield on the 3-year Australian government bond at around 0.1 percent and also maintained the parameters of the Term Funding Facility and the government bond purchase programme.

The bank repeated that it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.

For this to occur, the labor market will need to be tight enough to generate wages growth that is materially higher than it is currently, the bank said. This is unlikely to be until 2024 at the earliest.

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