General Information

In a widely-anticipated move, the Reserve Bank of Australia decided at its October meeting to lower the cash rate by 25 basis points to 0.75%. The decision was based on the observations outlined below.

Interest rates are very low around the world and further monetary easing is widely expected, as central banks respond to the persistent downside risks to the global economy and subdued inflation. Long-term government bond yields are around record lows in many countries, including Australia. Borrowing rates for both businesses and households are also at historically low levels. The Australian dollar is at its lowest level of recent times.

The Australian economy expanded by 1.4 % over the year to the June quarter, which was a weaker-than-expected outcome. A gentle turning point, however, appears to have been reached with economic growth a little higher over the first half of this year than over the second half of 2018. The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector should all support growth. The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending.

Employment has continued to grow strongly and labour force participation is at a record high. The unemployment rate has, however, remained steady at around 5.25% over recent months. Forward-looking indicators of labour demand indicate that employment growth is likely to slow from its recent fast rate. Wages growth remains subdued and there is little upward pressure at present, with increased labour demand being met by more supply. Caps on wages growth are also affecting public-sector pay outcomes across the country. A further gradual lift in wages growth would be a welcome development. Taken together, recent outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.

Inflation pressures remain subdued and this is likely to be the case for some time yet. In both headline and underlying terms, inflation is expected to be a little under 2 % over 2020 and a little above 2 % over 2021.

There are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne. In contrast, new dwelling activity has weakened and growth in housing credit remains low. Demand for credit by investors is subdued and credit conditions, especially for small and medium-sized businesses, remain tight. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.

 (Source: RBA Statement on Monetary Policy)

Australia's population grew by 1.6 % during the year ending 31 March 2019, according to the latest figures released by the Australian Bureau of Statistics (ABS).
The preliminary estimated resident population (ERP) of Australia at 31 March 2019 was 25,287,400 people. This is an increase of 388,800 people since 31 March 2018, and 118,600 people since 31 December 2018.

Natural increase accounted for 35.8 % of annual population growth, while net overseas migration accounted for the remaining 64.2 %. There were 298,100 births and 159,100 deaths registered in Australia during the year ending 31 March 2019. Natural increase during this period was 139,100 people, down 2.2 % from the previous year.

There were 534,700 overseas migration arrivals and 285,100 departures during the year ending 31 March 2019, resulting in net overseas migration of 249,700 people. Net overseas migration was up 4.9 % compared to the previous year.