The Reserve Bank has kept interest rates on hold for the second consecutive month, as improving data boosted hopes that previous cuts were lifting the economy.
The cash rate, which is already at a 60-year-low, remained at 2.5 per cent, matching economists and the market’s expectations.
Analysts said the central bank’s board members would be weighing the recent strength in the Australian dollar against the recovering property sector.
Earlier today, new figures showed that retail sales rose by a seasonally adjusted 0.4 per cent in August, surpassing economists’ expectations of a 0.3 per cent rise. It was driven by a 6.4 per cent lift in department store sales.
At the same time, capital city home values hit a new record high last month, with Sydney growing by 5.2 per cent. In contrast, prices slipped in Hobart by 3 per cent – the weakest performing capital city market.
Meanwhile, activity in the manufacturing sector lifted for the first time in two years on the back of a falling Australian dollar and lower interest rates.
The Australian Industry Group’s Performance of Manufacturing Index (PMI) rose 5.3 points to 51.7 in September, figures released today showed.
While economists had not expected another rate cut today, some said they forecast another cut by the end of the year to help stimulate the economy as it transits away from resources-led growth.