RBA’s Interest Rates Remain Low in a Tight Credit Conditions

The central bank of Australia has been going steady for the 26 consecutive months on Tuesday, suggesting an extended period of low rates in the background of tight credit conditions and adding over it is the tepid inflation and wages growth.

Not surprisingly, the Reserve Bank of Australia (RBA) board meeting closed with the same low rate of 1.50 percent.

Governor Philip Lowe said that credit rates were tighter but the mortgage rates continued on low numbers amid a strong competition for borrowers of higher credit quality. Rising prices are controlled by regulatory restrictions on lending with a stricter survey of bank behaviors.

The credit of home-owners remain strong but the demand of investors has become slower with changes in housing market activity, he added.  

Lowe remained optimistic on economic worth of A$1.8 trillion and has reiterated the next rate hike would go north instead of south.

Low inflation has been a major setback for the central bank, undermining the 2  to 3 percent target rate over two years now while the wage growth continues to be moving slow approaching a record low of 2.1 percent. Yet, Low says low-interest rates will be favorable to the Australian economy, although it is expected to be in a gradual manner.