RBA keeps rates lower for longer

The central bank’s conservative approach to interest rates recognises that the Australian economy has yet to meet its biggest challenge.

The Reserve Bank of Australia (RBA) left rates unchanged at its May board meeting and offered a firm statement that they will likely remain that way for some time. The conservative approach recognises that the Australian economy has yet to meet its toughest test -- and until it does rates should remain at a low level.

The cash rate was held at 2.5 per cent in May, the eighth consecutive month without a rate move, and based on the RBA’s inflation outlook the bank has inferred that rates could be left unchanged for a couple of years.

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