The RBA has decided to keep rates on hold at 1.5%.

“The low level of interest rates is continuing to support the Australian economy,” RBA Governor Philip Lowe said. “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual.”

Commenting on property markets, Lowe said markets have continued to ease and rent inflation remains low. Credit growth was also down 5.5% year over year.

“This is largely due to reduced demand by investors as the dynamics of the housing market have changed, Lowe added. “Lending standards are also tighter than they were a few years ago, partly reflecting APRA’s earlier supervisory measures to help contain the build-up of risk in household balance sheets.”

Mr Lowe said the RBA expects employment markets to remain positive as the unemployment rate falls from 5.3% to 5% over the next couple of years.

“The improvement in the economy should see some further lift in wages growth over time, although this is likely to be a gradual process.”

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