Australia’s central bank left its cash rate at 1.5% today, a widely expected decision given policymakers have said they see no strong case for a change in policy.

“The recent data on the Australian economy have been consistent with the bank’s central forecast for GDP growth to pick up, to average a bit above 3% in 2018 and 2019,” RBA Governor Philip Lowe said today.

“Business conditions are positive and non-mining business investment is increasing. Higher levels of public infrastructure investment are also supporting the economy. Stronger growth in exports is expected.”

Indeed, figures from the Australian Bureau of Statistics on Tuesday showed government spending climbed 1.6% in the first quarter, lifting potential for growth.

Separate data showed stronger exports and a relatively smaller rise in imports combined to add 0.3 percentage points to GDP last quarter.

The jump in goods exports helped narrow the country’s current account deficit to the smallest since early 2017 at AUD 10.5 billion.

A private sector survey on Tuesday showed activity in the services sector - a major engine of growth in the economy - rose at its fastest pace in over 13 years in May.

However, household consumption remains a “continuing source of uncertainty” for the RBA as wages grow slowly and debt remains elevated. That is a major reason behind the RBA’s decision to hold rates, which have remained at their current setting since August 2016. The futures market is not fully pricing in a hike until September next year.

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