Rates stay on hold amid stability
The Reserve Bank of Australia (RBA) has decided to leave rates unchanged for the second consecutive month amid the stability of the Australian economy after the federal election.
The decision to leave the cash rate at 2.50 per cent was widely predicted, as consumer and business confidence edges higher and the real estate market continues awaken from its long slumber.
Loan Market director Mark De Martino was tentative about the rate decision, suggesting the RBA has been doing a good job of keeping the economy in check however some economic indicators were pointing in opposite directions.
“With the encouragement of record low interest rates and excellent buying conditions, property markets throughout the country have been running hot this spring,” Mr De Martino said.
Mr De Martino shared that the cash rate moving only 25 basis points in six months, and 1.75 basis points in nearly five years, has been great for consumers looking for interest rate stability alongside the mixture of local and international economic conditions.
“Record low interest rates are helping buyers and owners save money, but the stability of the RBA cash rate has been equally encouraging because it’s allowing homeowners to budget more effectively around what their repayments may be.”
However he also added that the two-speed economy will weigh on the RBA’s decision to move rates downwards again as it awaits on other sectors of the economy to ‘step up’ after the mining investment boom.
“If retail and construction don’t step up to the plate, we could see another rate drop as early as November and perhaps again in early next year, which is great news for homeowners,” he said.