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MNI (London)
--RBA Board Leaves OCR At 1.5%, Now Unchanged For Over Two Years
--Pick Up In Inflation Expected Given Tight Labour Markets
By Lachlan Colquhoun
     LONDON (MNI) - The Reserve Bank of Australia left the official cash rate at
a record low 1.5% Tuesday, extending the unchanged run for the overnight Cash
Rate to more than two years.
     While the global economic expansion was "continuing", growth in China had
slowed and domestic inflation remained low, RBA Governor Philip Lowe said in a
statement accompanying the decision. 
     The RBA decision was widely expected by financial markets, largely due to
low inflation, although Lowe noted that a "further pick up in inflation is
expected given the tight labour markets."
     --GROWTH BOOST
     On the Australian domestic economy, the RBA Governor said that forecasts
for growth had been "revised up a little" for 2018 and 2018, with growth to
average 3.5% over the two years.
     The RBA is expected to focus on the declining unemployment rate, currently
at 5.0%, in the expectation that the labour market will tighten further,
boosting salaries and consumption and pushing inflation higher than the current
1.9%.
     The Bank has an inflation target of between 2 and 3%, and is expected to
wait for this to be achieved before moving to change its interest rate stance.
     --HEADWINDS
     There are still uncertainties on the horizon for the RBA, with trade a
concern. 
     "One ongoing uncertainty regarding the global outlook stems from the
direction of international trade policy in the United States," said Lowe.
     Domestically, while business conditions were "positive", the outlook for
household consumption was a "continued source of uncertainty", debt levels were
high and some asset prices had declined, Lowe said.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMLRB$,M$A$$$,M$L$$$,MT$$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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