Last Tuesday, the RBA decided to leave the cash rate unchanged at .75%. This was a little unexpected as the majority of economists anticipated a rate cut.

The RBA, in their statement, referred to a reasonable global economy outlook with signs that the 2018 slowdown is coming to an end. Globally, there’s still two sources of uncertainty; the U.S.-China trade war, as well as the corona virus.

For Australia, in the short-term, the bushfires and the corona virus are set to temporarily weigh down on domestic growth. But despite that, we do expect the Australian economy to grow by just under 3% this year and 3% next year, which is a step up from the past few years.

In 2019, household spending has experienced adjustments in order to cope with slow wages growth and a decline in house prices. For 2020, consumption growth is expected to pick up gradually. Unemployment rate declined in December to 5.1% and it’s expected to remain around this level for some time before gradually declining to below 5% in 2021. The housing markets have shown continuing signs of a pick up, in particular, Melbourne and Sydney. And mortgage loan commitments have also picked up, which is a great thing. The lower interest rates have supported household spending adjustments, as well as a boost in asset prices, which in turn will lead to increased spending. So for now, the RBA didn’t find it necessary to reduce the cash rate further with some global uncertainty, but also, reasonable signs in the Australian economy.

So the main point of discussion will be, will there be another rate cut and if so, when will that be?