You are using an older browser version. Please use a supported version for the best MSN experience.

Stevens' final rate decision fits the data

AAP logoAAP 6/09/2016 Garry Shilson-Josling, Economist

When Glenn Stevens sees the national accounts on Wednesday he's unlikely to regret the Reserve Bank's final interest rate decision with him in the governor's chair - the cash rate kept at 1.5 per cent on Tuesday.

The economy is hardly going along at a breakneck pace but it's not stalling either, so the situation does not demand an immediate cut in the cash rate to yet another record low.

Economists had a batch of new figures to support that view.

When they looked at the data from the Australian Bureau of Statistics on Tuesday, the first point of focus was the quarterly trade figures.

If anything, the numbers were even more disappointing than expected.

There was a pickup in imports but as they are made somewhere else, that meant less local production.

And foreigners bought a smaller volume of exports, causing production in Australia to suffer.

So gross domestic product (GDP) will be a quarter per cent less than it would have been if exports and imports had marched in step.

The negative hit from foreign trade will be offset by the jump in public sector spending revealed by the bureau on Tuesday.

Even so, the odds appear to favour a relatively modest rise in GDP, something around a half per cent at best, which would be the slowest quarter for a year.

Neither hurtling along nor grinding to a halt.

Probably not fast enough to satisfy the RBA, nor jobseekers, nor wage-earners unable to gain any traction when it comes to pay rises.

But, at the same time, not slow enough to warrant another rate cut that would risk pouring petrol onto a housing market that's already hot enough to generate price rises that defy common sense.

image beaconimage beaconimage beacon