RBA keeps interest rates at record low of 0.1%

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RBA keeps interest rates at record low of 0.1%

The Reserve Bank of Australia (RBA) has kept interest rates at its record low of 0.1% and has signalled that it will continue on this course to encourage cheap money into the banking system and the economy, but it is watching surging home lending very "carefully" it said.

The central bank's governor Mr Philip Lowe said property prices were rising in most markets in Australia with "Housing credit growth to owner-occupiers picking up, and strong demand from first-home buyers, in contrast, investor credit growth remains subdued”.

He also made mention that Australia's economic recovery from the pandemic is "well underway and is stronger than had been expected". And “Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."

The RBA board also decided to maintain its yield target for the three-year Australian Government bond at 0.1%

He also noted that "The unemployment rate fell to 5.8 per cent in February and the number of people with a job has returned to the pre-pandemic level," and "The economy is operating with considerable spare capacity and unemployment is still too high, so it will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target."