At its meeting this week, the RBA decided to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at 0%. The board also decided to continue to purchase government securities at the rate of $4 billion a week until at least mid-February 2022.
Philip Lowe, Governor of the Reserve Bank of Australia said in his statement, “The Australian economy is recovering from the setback caused by the Delta outbreak. High rates of vaccination and substantial policy support are underpinning this recovery. Household consumption is rebounding strongly and the outlook for business investment has improved.”
“The emergence of the Omicron strain is a new source of uncertainty, but it is not expected to derail the recovery. The economy is expected to return to its pre-Delta path in the first half of 2022.”
“Housing prices have risen strongly over the past year, although the rate of increase has eased over recent months. Housing credit increased by 6.7% over the past year, but, more recently, the value of housing loan commitments has declined from high levels. With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers.”
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