The Reserve bank of Australia maintained the rates at a record low on Tuesday which gives a positive look on the domestic activity prior to the data, which demonstrates growth more than 3 percent in the previous quarter.
RBA governor Philip Lowe sees the economy is to be “performing well” despite the assumption of reduction in unemployment. The decision of RBA is in line with the expectations as they keep the cash rate at 1.50 percent that was last reduced on August 2016 as policymakers wait for a recovery of the growth, as well as, its inflation.
However, as the consumer prices remain rather calm which prompted the RBA to have a steady growth for the past two years and it seems that there is no rush for the policymakers to tighten the rates. The markets are not pricing the rates until 2020.
Lowe anticipated the unemployment to lessen and chances for inflation to return to targets, although this will be in a sluggish manner.
However, household consumption brings uncertainty on the outlook amid weaker income but debts remain high.
A few economists assume that the sluggish wage growth of 2 percent and careful spending of consumers may affect negatively the economy.
The GDP data to be released on Wednesday is anticipated to increase by 0.6 percent in the September quarter compared to the previous three months growth of 0.9 percent. Meanwhile, the annual growth is probably 3.3 percent compared to the former sluggish growth of 3.4 percent in the last quarter.
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