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Rates on hold, low paid get boost

Rates on hold, low paid get boost

The Reserve Bank has left official interest rates on hold while the nation’s lowest paid will get a modest increase in their wages.

The RBA board, following its meeting today, left the cash rate at 2 per cent. That follows its decision last month to take rates to their lowest level on record.

Governor Glenn Stevens cited last week’s poor capital expenditure figures as a key concern for the bank, saying this was likely to continue through the coming year.

He said while there were positive economic signs, such as the lift in home construction, the overall economy was still operating with a “degree of spare capacity for some time yet”.

“Having eased monetary policy last month, the board today judged that leaving the cash rate unchanged was appropriate at this meeting,” he said in a statement.

“Information on economic and financial conditions to be received over the period ahead will inform the board’s assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.”

The decision, widely expected, followed the announcement by the Fair Work Commission on the national wage case.

From July 1, the minimum wage will be set at $656.90 a week or $34,159 a year.

It is a 2.5 per cent lift on the current wage increase. It works out for low paid workers as an extra 42 cents an hour.

The determination will directly affect the pay packages of almost 1.9 million people.