RBA maintains record low interest rates

The RBA said on Tuesday it is keeping the cash rate unchanged at 0.75 per cent, but confirmed that it remains prepared to ease monetary policy further if needed to support economic growth.

Following the meeting, governor Philip Lowe said that due to both global and domestic factors, it is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target. 

While confirming that the central scenario is for the Australian economy to grow around 2.75 per cent this year and 3 per cent next year, the RBA admitted that the bushfires and the coronavirus outbreak will temporarily weigh on domestic growth in the short term. 

'Rate cut by May' 

The RBA’s move did not come as a surprise, with economists around the country expecting no movement in February.

According to Finder’s latest RBA Cash Rate Survey, nine out of 10 economists predicted that the RBA would keep rates at 0.75 per cent, with only a small percentage forecasting a cut on the back of recent events including the bushfire crisis.

The comparison site revealed, however, that nearly four out of five economists who made a forward prediction (not including February) forecast a cash rate drop by May 2020 (79 per cent, 23/29).

A quarter said it is most likely in March, a third predicted April, while another quarter said the RBA is most likely to bring the rates down in May.

The next RBA board meeting is scheduled for 3 March.