RBA Expected to Hold Rate at 1.5%

The video discusses the central bank's decision to maintain the cash rate at 1.5% amid a two-speed economy in Australia. It highlights the economic reversal where the East Coast is booming while Western Australia struggles. The impact on housing prices in Sydney and Melbourne is examined, along with potential macroprudential measures. Inflation remains below the RBA's target, and the new governor, Phillip Lowe, is open to tolerating lower inflation rates temporarily. The appreciating Aussie dollar further compresses inflation, with no significant changes expected until 2018.

What is the primary reason for the central bank's decision to keep the cash rate on hold at 1.5%?

• To maintain economic balance between different regions

• To encourage foreign investment in Australia

• To prevent further inflation in Western Australia

• To support the struggling East Coast economy

What has been the impact of the low cash rate on the East Coast of Australia?

• No impact on house prices

• Decreased house prices

• Increased house prices

• Stable house prices

Why might the central bank consider macroprudential measures in Sydney?

• To decrease the cash rate further

• To boost the housing market

• To encourage more investors

• To control the rapid increase in house prices

What is the new governor Phillip Lowe's approach to handling inflation?

• Strictly maintaining the inflation target

• Allowing flexibility and tolerating lower inflation temporarily

• Increasing interest rates immediately

• Focusing solely on the housing market

How does the appreciating Australian dollar affect inflation?

• It increases inflation

• It stabilizes inflation

• It has no effect on inflation

• It compresses inflation further