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RBA’s Hawkish Tilt Reflects Governor on Alert for Asset Bubbles

  • Lowe’s statement shows a bank extremely reluctant to cut rates
  • RBA still expects 3 percent growth over next couple of years
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RBA Holds Cash Rate at 1.5%

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The Reserve Bank of Australia’s nod to rising leverage and a pick-up in home loans suggests an easing is unlikely any time soon -- given the governor has financial stability hard-wired into his DNA.

Philip Lowe and his board left interest rates unchanged at 1.5 percent Tuesday, as expected, and reaffirmed growth would accelerate to about 3 percent over the next couple of years despite a contraction in the third quarter. Lowe also noted the global reflation story and stronger growth in developed countries, spurring commodity prices in a windfall for Australia.