Rate hikes a long way off despite improving labour market

The Reserve Bank of Australia (RBA) will almost certainly keep interest rates on hold at 1.50% when it meets on Tuesday 4^th July. And while the sustained improvement in the labour market in recent months has quashed any talk of a further interest rate cut later this year, we expect that slow economic growth and persistently weak underlying inflation will prevent the RBA from raising rates this year or next year.