Australian central bank keeps monetary policy unchanged

Australia’s central bank maintained its interest rate as well as bond purchase programme on Tuesday, as widely expected, as these measures continued to help the economy by keeping financing costs very low.

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 per cent.

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

The bank said the initial 100 billion Australian dollar (76 billion dollar) government bond purchase programme was almost complete and the second 100 billion Australian dollar programme would commence next week.

Beyond this, the bank was prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation, the bank said.

The RBA signaled that the interest rate would not be raised until 2024.

“The Board will not increase the cash rate until actual inflation is sustainably within the two to three per cent target range.

“For this to occur, wages growth will have to be materially higher than it is currently.

“This will require significant gains in employment and a return to a tight labour market. The board does not expect these conditions to be met until 2024 at the earliest,’’ RBA said.

Regarding housing market, the bank said it would be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained amid rising housing prices and low interest rates.