In a week saturated with central banks’ meetings the RBA left policy on hold this morning as widely expected citing slow growth in household incomes and high debt levels as a source of uncertainty, according to analysts at Rabobank.

Key Quotes

“The RBA has recently marked itself out as one of the more cautious G10 central banks, having previously quelled market speculation that it could be prepared to hike rates during the course of 2018.  With it key policy rate at 1.5%, the RBA arguably has less pressure to rebuild its policy armoury and the slowdown in housing markets in Sydney and Melbourne will have facilitated its cautious position.  Similar to many other G10 economies Australia is suffering from very low wage inflation.  After years of very strong house price inflation, its households are also carrying very high debt levels.  The combination of these factors means that sensitivity to any rate increase could be marked.”

“A similar backdrop faces households in Canada.  Having already hiked rates three times since last summer the BoC is expected to leave policy unchanged at its March 7meeting allowing the Bank to assess the impact of its rate moves.  Steady policy is expected from the BoJ on March 9.”