Cash rate change still some time away

The Reserve Bank of Australia board is tipped to keep the official cash rate at 1.5 per cent - for the 28th month in a row - at the December meeting.

The saying goes that there is nothing certain in this world but death and taxes.

But you could be forgiven for adding the central bank keeping the official cash rate at its record low, for the time being, to that list.

Economists are widely expecting the Reserve Bank of Australia's board will hold the rate at 1.5 per cent at the December meeting on Tuesday.

That would mark the 28th consecutive month the rate, which reflects what the central bank charges commercial banks on overnight loans and influences all other interest rates, has remained unchanged.

It was last cut in August 2016 and hasn't been increased since November 2010.

The RBA has signalled things are not likely to change for some time.

But governor Philip Lowe says a shift will come eventually, as unemployment continues to drop and inflation is kept in line with the authority's targets.

"If the economy continues to move along the expected path, then at some point it will be appropriate to raise interest rates," he told an event in Sydney two weeks ago.

"This will be in the context of an improving economy and stronger growth in household incomes."

Most of the big four banks are expecting the rate to rise later in 2019, while Westpac and Capital Economics are tipping business as usual until late 2020.


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Source: AAP



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