Australia keeps rates at 0.1%, upgrades economic forecasts


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SYDNEY — Australia’s central bank left its key rates at near zero for a fifth straight meeting on Tuesday and pledged to keep policy super loose for a prolonged period even though the country’s economy is set to expand at a “stronger than expected” pace.

The Reserve Bank of Australia (RBA) reiterated its commitment to keep policy accommodative for as long as is needed to pull down unemployment and push inflation higher, signaling the cash rate would remain at record-low 0.1% until at least 2024.

The RBA’s as-expected decision comes as it painted a rosy picture of the A$2 trillion ($1.55 trillion) economy, and upgraded the growth forecast to 4.75% over 2021, from its February forecast of 3.5%.

The jobless rate is seen declining to be around 5% at the end of this year and 4.5% at Dec-2022. In February, the RBA’s forecast had unemployment at 5.5% by end-2022.

The central bank will release detailed forecasts on Friday at 0130 GMT.

The RBA cut interest rates three times last year, announced a yield curve control (YCC) program to keep three-year government bond yields at 10 basis points and launched a massive quantitative easing program targeting longer term bonds.

In a post-meeting statement, RBA Governor Philip Lowe said the board will consider future bond purchases at its July board meeting, following the completion of its second round of A$100 billion ($77.40 billion) quantitative easing program.

“The Board is prepared to undertake further bond purchases to assist with progress towards the goals of full employment and inflation,” Lowe said. “The Board places a high priority on a return to full employment.” ($1 = 1.2920 Australian dollars) (Reporting by Swati Pandey; Editing by Shri Navaratnam)