REPEAT: MNI: RBA Leaves Rates On Hold, Cites Slower Growth

Repeats Story Initially Transmitted at 04:25 GMT Mar 5/23:25 EST Mar 4

By Lachlan Colquhoun 

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

unchanged at a record low 1.5%, citing weak household consumption and falling

property prices as the main causes of domestic economic uncertainty.

     The RBA decision, widely expected, came before fourth quarter GDP figures

are published Wednesday, with some analysts anticipating a reading of 0.2% q/q,

weaker than current MNI median forecast.

     In its February Statement on Monetary Policy the RBA downgraded its growth

forecasts, with the June 2019 estimate slashed from an annualised 3.6% to 2.4%.

     --EVENLY BALANCED

     The Bank's outlook over 2018 was that the next move in rates was likely to

be up, but it has revised that view to say recent economic data meant that the

balance of probabilities between a rate cut or rise had "shifted to be more

evenly balanced."

     In the statement accompanying today's decision, RBA Governor Philip Lowe

conceded that the "slower pace of growth has continued into 2019".  The RBA

Board will now await developments in the domestic economy over 2019.

     "The outlook for the global economy seems reasonable, although downside

risks have increased," Lowe said, noting "trade tensions remain a source of

uncertainty."

     In terms of the domestic economy, Lowe added that growth was supported by

rising business investment, higher levels of spending on public infrastructure

and increased employment, even though this had not yet flowed through to higher

wages.

     The Governor noted the continuing "adjustment" in the Sydney and Melbourne

housing markets, after the earlier large run-up in prices, saying conditions

remain soft in both markets and rent inflation remains low. But mortgage rates

remain low and there is strong competition for borrowers of high credit quality,

he said.

     --WAGES PICK-UP

     The RBA continues to look for an increases in household income as the key

to support household spending and ultimately impact on headline inflation, which

the bank expects to be 2% this year and rise to 2.25% in 2020, a process which

was taking "a little longer than earlier expected.".

     Lowe noted that the domestic labour market remained strong, and said he

anticipated unemployment would fall from the current level of 5.0% to 4.75%

"over the next couple of years."

     "The improvement in the labour market should see some further lift in wages

growth over time, although this is still expected to be a gradual process," he

said.

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