RBA Cash Rate Unchanged At 1.5% In November

The RBA kept rates on hold at 1.5% at their November meeting in line with broad market expectations. Having previously cut rates twice in the year at the August and May meetings, only a small portion of forecasters were looking for a rate cut at this juncture.

The statement accompanying the decision was relatively unchanged from last time around with the bank striking a broadly neutral tone with a “weak easing bias”. Indeed, the concluding paragraph of the November statement was identical to October’s noting “that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”.

Key Changes To Statement

In terms of changes, key additions included a slightly more positive sentiment on growth in China as well as Australian house prices over recent months.  Negative changes were aligned mainly to Australian labour market conditions with the bank noting that over-all jobs growth (not just full time) had slowed. The global economy was regarded as “continuing to grow at a lower than average pace”.

Labour markets in advanced economies were noted as improving but balanced by subdued “growth in global industrial production and trade” whilst “Inflation remains below most central banks’ targets”. Referring to China, the bank noted that conditions…have steadied recently”. This was a clear improvement from last month’s comments on the country which simply noted that “policymakers have been supporting growth”.

In terms of the domestic situation, the RBA noted that “the economy is continuing to grow at a moderate rate” with the large decline in mining capex “being offset by growth in other areas, including residential construction, public demand and exports”. In terms of the labour market, the RBA noted that although jobs growth “overall has slowed”, “forward-looking indicators point to continued expansion in employment in the near term”.