The Housing Industry Association (HIA), the voice of Australia’s residential building industry reports that the Board of the Reserve Bank of Australia has resolved to leave interest rates unchanged at 2.5 per cent.

HIA Economist Geordan Murray explains that the RBA’s decision to leave rates on hold is consistent with views conveyed in the Bank’s recent communications. The rate of economic growth is expected to remain below trend throughout 2014 as the drivers of growth transition away from mining investment, which will be accompanied by weakening labour market conditions. 

He comments that the accommodative monetary policy settings are seen as necessary to support economic growth through this period of transition.

According to Geordan Murray, the RBA appears satisfied with the way households are responding to current policy settings and is particularly encouraged by the improvements in leading indicators of activity in the residential building sector. 

He adds the Board is less satisfied with the response from businesses, noting there have been only tentative signs that investment intentions are improving. However, in the absence of any external shocks, it is likely that rates will remain on hold for some months yet.