Australia's interest rate kept on hold at 1.50 pct

Source: Xinhua| 2017-06-06 15:14:00|Editor: xuxin
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SYDNEY, June 6 (Xinhua) -- The Reserve Bank of Australia (RBA) decided to keep the country's cash rate unchanged at 1.50 percent on Tuesday, citing slow wage growth and variations in the housing market.

This is the 10th consecutive month, the interest rate has remained unmoved.

Kristina Clifton, an economist of the Commonwealth Bank, explained to Xinhua that although Australia's economy has not consistently grown enough to warrant an increase in interest rates, the accompanying statement by the RBA suggested "a fairly positive outlook for global growth, with commodity prices generally higher than one year ago."

The problem for Australia however, is that its major material exports, iron ore and coal, have "declined over recent months as expected, unwinding some of the earlier increases," Governor of the RBA Philip Lowe said in a statement.

At the core of the decision however was the uncertainty around the labor market.

"Employment growth has been stronger over recent months, although growth in total hours worked remains weak," Lowe said, adding that slow growth in real wages is restraining growth in household consumption, with household debt growth rising faster than household income growth.

Wide variations in the housing market have also contributed to uncertainty in the economy.

"Prices have been rising briskly in some markets, in other markets, prices are declining," Lowe said.

"In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years."

Other economic data on Tuesday showed Australia's current accounts deficit fell 0.7 percent for the first quarter of 2017, the Australian Bureau of Statistics revealed.

Exports dropped 1.6 percent, while imports lifted 1.6 percent.

But according to Clifton the decline was "to do with weather events and the effects of Cyclone Debbie in March, which had a huge impact on coal exports in North Queensland."