Reserve Bank keeps Australia’s official cash rate at historic low

Australia’s historic low official cash rate has been kept on hold, with the RBA maintaining the conditions for lifting it won’t be met for a while.

The Reserve Bank of Australia has maintained the official cash rate at a historic low of 0.1 per cent despite the nation’s economic recovery turning out stronger than earlier expected.

The central bank reiterated it would not increase the cash rate – the interest rate on unsecured overnight loans between banks – until actual inflation was sustainably within the 2 to 3 per cent target range, which it does not expect to happen before 2024.

RBA governor Philip Lowe says a pick-up in both wages growth and underlying inflation is likely to be only gradual. Picture: James Brickwood/AFR

“A pick-up in both wages growth and underlying inflation is expected, but this pick-up is likely to be only gradual,” governor Philip Lowe said after the RBA’s monthly board meeting on Tuesday.

“In the bank’s central scenario, it takes some years for the stronger economy to feed through into wage and price increases that are consistent with the inflation target.

“In underlying terms, inflation is expected to be 1.75 per cent over 2022 and 2.25 per cent over 2023.”