The Australian Dollar is trading lower shortly after the Reserve Bank of Australia (RBA) announced its interest rate and monetary policy decisions at 03:00 GMT. The RBA left its benchmark interest rate unchanged at a record low of 1.50 percent for the twenty-ninth straight time at its April monetary policy meeting.

“The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that it was appropriate to hold the stance of policy unchanged at this meeting. The Board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time,” the RBA statement read.

RBA policymakers also commented on the housing markets and inflation levels, saying, “The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft and rent inflation remains low. Credit conditions for some borrowers have tightened a little further over the past year or so.”

“Inflation remains low and stable. Underlying inflation is expected to pick up gradually over the next couple of years, although this has been taking a little longer than earlier expected. The central scenario is for underlying inflation to be 2 percent this year and 2.25 percent in 2020. In the near term, headline inflation is expected to decline because of lower petrol prices earlier in the year, while underlying inflation is expected to remain broadly stable.”

Finally, on the value of the Australian Dollar, “The Australian Dollar has remained within its narrow range of recent times. While the terms of trade have increased over the past couple of years, they are expected to decline over time.”

Post-Decision Statement

After the release of the interest rate decision and monetary policy statement, RBA governor Philip Lowe emphasized the strength of the labor market and pick-up in wages as a “welcome development”.

“Continued improvement in the labor market is expected to see some further lift in wages growth over time, although this is still expected to be a gradual process,” Dr. Lowe said.

As far as economic growth is concerned, Lowe conceded GDP data painted “a softer picture of the economy than do the labor market data”.

“Growth in household consumption is being affected by the protracted period of weakness in real household disposable income and the adjustment in housing markets,” he said.