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Official cash rate remains unchanged at one per cent - Reserve Bank

The Reserve Bank has announced today that the official cash rate, or OCR, will remain unchanged at one per cent.

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After a big shock drop two months ago, the OCR will remain at one per cent. Source: 1 NEWS

In August, the official cash rate was cut by 0.5 percentage points to one per cent – a record low.

The Reserve Bank released a statement today explaining the decision to keep the OCR unchanged.

"Economic developments since the August statement do not warrant a change to the already stimulatory monetary setting at this time," the statement begins.

"Economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending. We expect economic growth to remain subdued over the remainder of the calendar year.

"We will continue to monitor economic developments and remain prepared to act as required."

The Reserve Bank says trading-partner and global manufacturing is also facing uncertain times, which is "dampening global business investment".

However, it says there is better news on the domestic front for 2020.

"Domestic economic activity is expected to increase during 2020 supported by low interest rates, higher wage growth, and increased government spending and investment.

"The low level of the OCR has flowed through to lower lending rates more generally, which support spending and investment. Rising capacity pressures are projected to promote a pick-up in business investment."

The Reserve Bank says interest rates will need to remain at low levels for a prolonged period to ensure inflation reaches the mid-point of its target range and employment remains around its maximum sustainable level.