The Reserve Bank has reiterated that it does not intend to lift interest rates next year, despite growing industry speculation of a rise.

This week, at the final board meeting of the year, the RBA left the cash rate at 0.10% and Governor Philip Lowe announced that the latest data and forecasts did not warrant an increase in the cash rate during 2022.

Lowe says that, despite the emergence of Omicron,
leading indicators point to a strong recovery in the labour market, job ads are at historically high levels and wages growth has picked up.

“The emergence of the Omicron strain is a new
source of uncertainty, but it is not expected to derail the recovery,” he says. “The economy is expected to return to its pre-Delta path in the first half of 2022.

“The Board will not increase the cash rate until
actual inflation is sustainably within the 2% to 3% target range. This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently.”