In line with market and our expectations, the Reserve Bank of Australia (RBA) kept interest rate unchanged at a historic low of 1.5%, marking rates unchanged for the 23rd consecutive meeting. We are not expecting the RBA to lift the policy rate until late 3Q2019 or in 4Q2019. We feel there is limited case for us to build a rate hike any earlier than 3Q2019 due to a sharp cooling in Australia’s once red-hot housing market, added with a weak wage growth and fading “household wealth effect” that will continue to weigh on consumption.

• In line with market and our expectations, the Reserve Bank of Australia (RBA) kept interest rate unchanged at a historic low of 1.5%, marking rates unchanged for the 23rd consecutive meeting.

• The decision to leave the policy rate unchanged was due to the subdued price pressure and household consumption on the back of lacklustre wage growth. Current household debt remains elevated at 121.7% of GDP. Besides, the property market is still under the RBA’s radar as well as concern over the trade war risk.

• We are not expecting the RBA to lift rates until late 3Q2019 or in 4Q2019. We feel there is limited case for us to build a rate hike any earlier than 3Q2019 due to a sharp cooling in Australia’s once red-hot housing market, added with a weak wage growth and fading “household wealth effect” that will continue to weigh on consumption.

Source: AmInvest Research - 4 Jul 2018