RBA becoming more confident in the economy

The Reserve Bank of Australia may have left interest rates at 1.5% for the 14th month today, but its growing confidence in the outlook for activity and inflation may mean it will be prepared to signal early next year that it’s getting close to raising interest rates. We still believe that subdued GDP growth and inflation will force the RBA to keep rates at 1.5% for all of next year, but the risks lie on the upside.