This marks the fourth consecutive meeting the RBA has decided to hold the rate at 0.10%, after making a 'Melbourne Cup cut' in November last year.
RBA Governor Dr Philip Lowe said while there are improvements in the economy, certain key indicators lag behind.
"The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. While there are still considerable uncertainties regarding the outlook, the central case has improved," he said.
"Inflation remains low and below central bank targets.... wage and price pressures are subdued and are expected to remain so for some years. The economy is operating with considerable spare capacity and unemployment is still too high.
"It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target."
Dr Lowe maintains that wage growth and inflation consistently in the 2-3% range are necessary before the cash rate rises; the RBA Board does not expect these conditions to be met until 2024 "at the earliest".
The Governor also said that "the Bank will be monitoring trends in housing borrowing carefully and it is important lending standards are maintained".
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Westpac's head of rate strategy Damien McColough said it was more of the same from the RBA.
"There are ongoing signs that the market has re-calibrated its inflation expectations sufficiently for now and so other more supportive influences, such as the ongoing QE [quantitative easing] program can gain more traction," he said.
Mortgage Choice CEO Susan Mitchell said the hold was "unsurprising", but that lenders are also starting to move independently of Reserve Bank movements.
"Interest rates remain at record lows, both for variable rate and fixed interest rates, however we are starting to see some lenders raise interest rates particularly on 4-year and 5-year fixed home loans," she said.
"With the RBA’s term funding facility set to end in June, further upward pressure on fixed interest rates may continue later this year."
Photo by Pat Whelen on Unsplash
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