* RBA keeps rates at 1.5 pct for an eighth straight month
* Concerned about brisk pace of house prices in some markets
* Says strong lending standards to help address housing
* Highlights indicators labour market has softened
* Trade surplus jumped in Feb, boost to national income
By Swati Pandey and Wayne Cole
SYDNEY, April 4 Australia's central bank held
rates steady for an eighth month on Tuesday, a widely expected
decision as it attempts to balance red-hot housing markets and
tepid consumer spending.
The Reserve Bank of Australia (RBA) kept rates at a record
low of 1.5 percent following easings in August and May last
The RBA has been concerned about soaring risks in the
country's frothy housing market, with Governor Philip Lowe
recently signalling further cuts in interest rates were off the
Financial regulators have ratcheted up measures to curb
house prices and tighten lending conditions for property
investors, while the country's biggest banks have even raised
mortgage rates for ordinary homebuyers.
"By reinforcing strong lending standards, the recently
announced supervisory measures should help address the risks
associated with high and rising levels of indebtedness," Lowe
said in a policy statement on Tuesday.
Tuesday's statement highlighted the RBA's apprehensions
about a soft labour market with a new reference to rising
unemployment. The jobless rate is at a 13-month peak while
employment has been skewed toward part-time work.
Lowe's comments surprised many Aussie dollar bulls, sending
the Australian dollar down by about a quarter of a U.S.
cent. It was last down 0.4 percent to a three-week low of
The futures market was barely convinced about the
probability of a rate cut though. Investors are pricing in an 8
percent chance of an easing later in the year, up from 4 percent
before the statement.
If the recent run of soft data continues and macroprudential
measures work to restrain home prices, the RBA might see room
to lower rates again.
"They're edging towards a more downbeat assessment of
things," said JP Morgan economist Ben Jarman.
"They were pretty happy from the tailwind from global
commodity prices and housing gave them a reason to be hawkish.
But now, some of the activity side has subsided. It's a
gradually evolving story about their assessment."
Data out this week showed retail sales unexpectedly fell in
February, highlighting the soft underbelly of Australia's weak
On the positive side, the RBA welcomed a return of some
vigour to the global economy that has pushed up commodity
prices, in particular coal and iron ore.
That has in turn provided a "significant boost" to
Australia's national income, the RBA added.
Indeed, data out on Tuesday showed Australia's trade surplus
ballooned in February, nudging the country nearer to its first
current account surplus since the mid-1970s.
The massive turnaround in trade is boosting profits and tax
receipts and has been welcomed by the RBA as a support for
spending and investment.
Tuesday's data showed a trade surplus of A$3.57 billion
($2.72 billion) in February, more than double the previous month
and far above forecasts of A$1.8 billion.
The improvement came even as bad weather undermined exports.
Cyclone Debbie this month brought massive flooding to an
area of northern Queensland that accounts for well over half of
Australia's exports of the coking coal used to make steel.
While the mines themselves do not seem to seriously damaged,
rail lines that take coal to the ports have been. Some could be
down for anywhere up to five weeks, which will likely curb
export volumes in the second quarter.
On a brighter note, the supply disruption has lifted coking
coal prices by around 15 percent at a time when contracts for
the quarter are being hammered out and will provide some offset.
(Reporting by Wayne Cole and Swati Pandey; Editing by Eric