Economics
Australia Holds Key Rate as Sliding Currency Stimulates Growth
- Westpac mortgage hike and weak house prices could blunt impact
- RBA has kept rates at record low since 2016 to drive inflation
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Australia kept interest rates at a record low Tuesday, as it has for the past two years, while a currency sliding toward 70 U.S. cents offers the prospect of additional stimulus for the economy.
As expected, Reserve Bank Governor Philip Lowe left the cash rate at 1.5 percent, a stance he expects will eventually tighten the labor market and spur enough wage growth to speed up inflation. While the Aussie dollar’s more than 10 percent drop since February may help quicken that process, there’s a risk that rising mortgage rates and falling property prices could encourage households to put away their wallets.