Cash rate on hold

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The RBA has announced it will keep the official cash rate on hold at 1.75 per cent at its monthly board meeting.

The decision comes after the central bank cut the cash rate by 25 basis points last month to combat low inflation. The cash rate remains on hold as GDP figures released last week were stronger than expected. Gross domestic product expanded 1.1 per cent in the first quarter of 2016 and year-on-year headline growth accelerated from 2.9 per cent to 3.1 per cent, its fastest pace in four years.

Recent data suggests overall growth is continuing, despite a very large decline in business investment and weak inflation expected to remain for some time. Most economists predict the RBA is likely to keep the cash rate on hold until August, after the second-quarter CPI figures are released in July.

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