Reserve Bank holds interest rates at record-low level of 0.75 percent

Australian Dollar Vs US Dollar Daily Chart

Australian Dollar Vs US Dollar Daily Chart

"This is especially so in Sydney and Melbourne, but prices in some other markets have also increased recently". The forecast for annual growth is set to reach 1.7 per cent, from a decade long fall to 1.4 per cent, which will support the hopes of the Reserve Bank of Australia for a gradual recovery. However, some market watchers say the central bank needs to cut the rates further to meet its targets.

"Given these effects of lower interest rates and the long and variable lags in the transmission of monetary policy, the board made a decision to hold the cash rate steady at this meeting while it continues to monitor developments, including in the labour market", RBA governor Philip Lowe said.

"A healthy and vibrant economy though needs a much broader base of growth".

"We need a strong household sector and greater investment from businesses", Mr Pickering said.

Thanks to high anticipated consumer spending over Christmas and the New Year, the RBA decided to make no change to interest rates, despite there being a strong case for a fourth rate cut this year.

Two-thirds of Finder RBA's Cash Rate Survey, a survey of economists and experts, also predict a cut to 0.5 per cent in February.

"This would take the cash rate down to the confirmed effective lower bound", she said.

In June, the RBA cut the rate for the first time in three years and followed up with 0.25 per cent reductions in July and October as the economy sagged under the weight of months of downbeat economic data and downgraded growth prospects.

Looking ahead, if rebounding property prices fail to translate into increased consumer confidence and therefore, rising consumer spending and a growing appetite for investing, then we may see another interest rate cut in February or March 2020. "If consumers are buoyed by recent interest rate cuts and this translates to big Christmas spending, it may form part of a fiscal stimulus that gets the economy moving", she said.

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