Governor Lowe outlined in a speech earlier this week that before interest rates are raised from their record low of 1.5% the RBA will want to have “reasonable confidence that inflation is picking up to be consistent with the medium-term target and that slack in the labour market is lessening”. But despite the recent fall in the unemployment rate, we doubt these requirements will be met any time soon. Indeed, we expect rates to remain on hold until at least the second half of 2019.
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