The challenge ahead for the RBA

Time is running out for the economy to rebalance away from the mining boom, and more stimulus may be needed to accomplish the task.

The Reserve Bank of Australia (RBA) left rates unchanged at the June board meeting and continues to indicate that they will remain that way for some time. But with household spending slowing and the construction boom more myth than reality, the RBA faces a massive challenge to keep the economy on track before mining investment collapses.

The cash rate was held at 2.5 per cent in June, the ninth consecutive month without a rate move, and based on the RBA’s inflation outlook it is implied that rates could be left unchanged for a couple of years.



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