RBA says indicators of labour and housing markets mixed, Aussie drops

Australia's central bank kept its main policy rate unchanged despite a more buoyant outlook for growth overseas.

RBA's cash rate was kept at 1.50%.

Also echoing remarks from other central banks, such as the Riksbank, rate-setters in Sydney said a strengthening exchange rate would "complicate" the country's transition after its mining boom.

It also noted the risks linked to high and rising household debt.

As of 1025 BST, the Australian dollar was down by 0.90% to 0.7592 against the greenback, just off its year-to-date highs of 0.7762.

The broad-based pick-up in the global economy was continuing, they said, with labour markets having tightened in many countries and projections for global growth had been revised higher.

China's economy was being supported by higher spending on infrastructure and property construction. Yet "uncertainties remain" they said, and in China's case the high level of debt was a medium-term risk.

Indicators for labour and housing markets mixed

Regarding the RBA's views on the country's labour and housing markets, which is what analysts were most keen to know about, policymakers said indications for both were "mixed".

In the former, hiring had been stronger over recent months but wage growth was low and likely to remain so "for a while yet".

On housing, conditions "vary considerably" around the country, the RBA said, noting that recent supervisory measures should help to keep a lid on risks associated with high and rising levels of household indebtedness.

Lenders had recently also announced higher mortgage rates for investor and interest rate-only loans, the central bank said.

Domestically, business investment had picked up in those parts of Australia not directly impacted by lower mining investment.

Growth in consumption meanwhile was "subdued".

Inflation was seen gradually increasing as the economy strengthened, they said.

Acting as a backdrop, further interest rate hikes were expected in the US and there was no longer an expectation of additional easing in other major economies.