Australia's cash rate has been left on hold at the historic low level of 0.10 per cent.
This afternoon the Reserve Bank of Australia (RBA) met to decide the course of Australia's interest rates, choosing to hold its hand steady in the face of soaring house prices and minimal wage growth.
The central bank slashed interest rates to 0.10 per cent in November 2020 as a way of easing the potential economic pain wrought by the COVID-19 pandemic.
READ MORE: Risk of earlier RBA rate hike after cash splash
In February 2020 – just prior to the true impact of the virus being known – Australia's official cash rate was sitting at 0.75 per cent.
RBA Governor Philip Lowe in his monetary statement said Australia's economic recovery has been "faster than expected".
"Housing markets have strengthened further, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers," Mr Lowe said.
"There has also been increased borrowing by investors.
"Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."
READ MORE: What you need to earn to afford a mortgage in Sydney
Despite this, most experts believe Australia's interest rates will not increase again until 2023 or later when inflation grows.
"The next move in interest rates is almost certain to be up, with the RBA likely to start tightening monetary policy by 2023," Bendigo Bank's David Robertson said.
"The current pace of economic recovery combined with fiscal and monetary stimulus may bring this forward to late 2022, but the RBA would prefer to wait for other central banks (such as New Zealand and Canada) to move first, before exiting 'zero percent interest rates'."
READ MORE: Aussie house prices 'at risk' from China shift on iron ore
Shane Oliver from AMP Capital believes slow wage growth is preventing inflation from rising to the point where the cash rate would be raised.
"While the economic recovery is faster than expected, the RBA's conditions for a rate hike are still far from being met," Mr Oliver said.
"The jobs market is still a long way from full employment, wages growth at 1.5 per cent is way below the 3 per cent plus pace necessary to sustain 2–3 per cent inflation and in any case inflation is still well below its target zone.
"So a rate hike remains some time off."
