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Glimpses of confidence from RBA, reports St George

Minutes from the latest Reserve Bank of Australia (RBA) board meeting have been released this week and St George bank is seeing “slivers of optimism,” with the driving force for the positivity coming from the labour market.

 

Better-than-expected figures for the labour market saw the RBA revise their predictions for unemployment to drop to 4.75% by 2020. Business investment was another positive talking point, suggesting business investment could “could turn out to be stronger than currently expected.”

 

With regards to the official cash rates, St George “expect that the RBA will stay on the sidelines, leaving the cash rate on hold this year and next year.” The interest rate has been at its current level of 1.5% for 26 meetings in a row, since August 2016.

 

Concerns raised by the board related to; the domestic economy with household debt levels, consumer spending, slow income growth rates, and the housing market. Global issues include trade tensions and growth was expected to “ease a little” but stay “above potential in 2019.”

 

Based on the latesteconomic outlook from the Organisation for Economic Co-operation and Development (OECD), abc.net.au reports that interest rates could rise in the next two years, but only if wage growth sees a rise. OECD chief economist Laurence Boone told the ABC "the Australian economy is doing well." 

 

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