The Reserve Bank of Australia remains upbeat about the nation’s economy, signalling it doesn’t intend to move interest rates this year.
The RBA left the cash rate at a record low of 1.5 per cent at its March board meeting on Tuesday, saying that was the best way to maintain growth and push low inflation back into its two to three per cent target band.
Governor Philip Lowe was upbeat about exports, business investment and consumer spending growth at the end of last year.
At 1620 AEDT the Australian dollar had jumped to 76.16 US cents, from 75.96 US cents at 1430 AEDT.
Westpac chief currency strategist Robert Rennie said the RBA was more optimistic about global growth, China and the domestic economy as well as consumer and business confidence.
“It feels as if the statement that we got was a glass that was slightly more than half-full, so I’m not surprised the dollar is up,” he told AAP.
CommSec senior economist Craig James said while Tuesday’s commentary from the RBA was “boring”, the central bank had signalled it intended to leave rates on hold.
“In short, the Reserve Bank is saying ‘move on, move on, nothing to see here’,” he said.
However, UBS economists said the RBA was less relaxed about housing, noting that investor loans had picked up and removing last month’s comment that “some lenders are taking a more cautious attitude to lending”, meaning the central bank no longer viewed that to be the case.
Royal Bank of Canada senior economist Su-Lin Ong said the unchanged commentary on the labour market, wages and inflation should not be overlooked either.
“They continue to capture a sense of uncertainty over labour market outcomes and the composition of job creation, which is intertwined with weaker than expected wages growth and a slight nudging down of the RBA’s core inflation forecasts over the medium term,” she said in a note.