Cash Rate Outlook: RBA Stays the Course

•              Some things are easier to predict than a horse race. As widely expected, the Reserve Bank of Australia (RBA) left the official cash rate on hold at 1.50% at its November meeting.

•              Of note, the RBA flagged more optimistic revisions to its growth and employment forecasts.  The RBA is now expecting the unemployment rate to fall to “around 4.75% in 2020.” The RBA also indicated an upgrade to the RBA’s GDP growth forecasts. We will gain further details in the RBA’s Statement on Monetary Policy to be released on Friday 9 November.

•              Despite the more positive forecasts, the RBA maintained its commentary in its final paragraph – that there was progress in reducing unemployment and having inflation return to its target, but with the caveat that “this progress is likely to be gradual”. 

•              The downside risks to the growth outlook reflecting a downturn in the housing market and the potential negative impact on consumer spending suggests that a hike remains someway off. We continue to expect that the RBA will leave official interest rates on hold for some time.



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RBA Minutes of the July Board&hellip