MNI REVIEW: RBA Leaves Rates Unchanged, Cites Low Growth

     SYDNEY - (MNI) - The Reserve Bank of Australia left official interest rates

unchanged at 1.5%, pointing to low growth and a "protracted period of weakness"

in household income as justifications for its accommodative policy.

     RBA Governor Philip Lowe said that although the Australian labour market

remained strong, with unemployment at 4.9%, the GDP data painted a "softer

picture of the economy."

     GDP rose by just 0.2% in Q4 2018 to be 2.3% higher over the year.

     Lowe said the strong labour market had not translated to higher income and

consumption spending, which was also being impacted by the "adjustment in

housing markets" as property prices continue their fall.

     --INFLATION PICK-UP GRADUAL

     The Bank is still expecting unemployment to fall and inflation to pick up,

although it says this will happen gradually and "has been taking a little longer

than expected."

     "The low level of interest rates is continuing to support the Australian

economy," Lowe said in a statement following today's Board meeting.

     "Further progress in reducing unemployment and having inflation return to

target is expected, although this progress is likely to be gradual."

     Lowe concluded saying the RBA would "monitor developments and set monetary

policy to support sustainable growth in the economy and achieve the inflation

target over time."

     In February's Statement on Monetary Policy the Bank shifted its outlook

from expecting the interest rate move to be up to a balanced outlook, where the

next movement could be up or down depending on both domestic and international

economic conditions this year.

     The April meeting came just hours ahead of the Federal Budget, which is

expected to contain tax cuts and one off payments as governing coalition heads

to a May election.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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