Interest Rate Update – March 2018

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

A raft of economic data recently released continues to show a slowly improving domestic economy.  Company profits during the final quarter of 2017 increased by 2.2 per cent across the majority of industries, with mining company profits increasing 4.2 per cent due to higher demand for commodities such as iron ore.  Approvals for the construction of new homes rose 17.1 per cent in January which far exceeded the anticipated 5.0 per cent improvement. These results come ahead of December’s gross domestic product figures, due to be released tomorrow, with most Economists expecting a quarterly growth rate of 0.5 per cent.

The positive economic data is not restricted to Australia with strong growth throughout many of the US service industries.  The planned tariffs on steel and aluminium may start a more aggressive trade policy (globally) but the specifics remain unknown at this stage.

Notwithstanding the improvement in the Australian, US and other global economies, together with the current uncertainty of the US tariff situation, the RBA remains keen to take a cautious approach with monetary policy with no change to the cash rate expected for some months.

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