The Reserve Bank has decided against delivering Aussie homeowners more mortgage relief, holding the cash rate firm at 4.10 per cent a month after making its first cut in more than four years.
Despite economists and banks forecasting several rate cuts this year, the RBA’s monetary policy board emerged from its two-day meeting on Tuesday to announce it would not be shifting the dial for successive months.
The RBA decision comes after Australia’s headline inflation fell to 2.4 per cent in February, while the trimmed mean dropped to 2.7 per cent.
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The inflation numbers were within the Reserve Bank’s target band of between two and three per cent but more weight is given to quarterly figures, which are not as prone to fluctuations.
While the board was still locked in their conclave on Tuesday, the Australian Bureau of Statistics reported retail sales grew at 0.2 per cent for the month of February.
That was slightly below consensus expectations for a 0.3 per cent rise in spending, but further bolsters the case that household consumption was recovering, if only very gradually.
Food-related spending drove the rise, with household goods dropping for a second-straight month, said ABS head of business statistics Robert Ewing.
“Following promotion-based growth across the December quarter, spending on household goods continued to moderate with lower discretionary spending to begin the year,” Ewing said.
The figures do not materially change the outlook for consumer spending, said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.
Low unemployment and real wages growth bode well for future consumption.
“Last week’s federal budget also contained more support for households through extended utilities rebates and tax cuts, which further shores up the outlook if these policies are legislated,” Langcake said.
– With AAP