RBA Makes Sensible Move
The Reserve Bank of Australia (RBA) has been sensible in an unpredictable global economic environment to keep official interest rates on hold, says leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said despite a variety of predictions over how the RBA would respond to its concerns about rising inflation, the central bank maintained the cash rate at 4.75 per cent for the ninth consecutive month.
Mr Rushton said the United States’ debt crisis, continuing concerns about Europe and the multi-speed domestic economy meant it was not the right time for the RBA to be tightening monetary policy.
The RBA staying on the sidelines is the right call in the current circumstances as the conditions in Australia are also of concern as we are caught in a boom and gloom economic cycle, he said.
Several sectors in the domestic economy are still hurting, retail spending remains soft and many households need the rate reprieve to continue as they battle cost of living increases.
While there’s plenty of chatter either side of the interest rate fence, there has only been one rate increase since May last year and unless there’s a significant economic event there is a strong case for rates to stay on hold for some time. It is pleasing that the RBA recognises this while continuing to closely monitor rising inflation numbers.
Mr Rushton said while there was a reprieve today for mortgage holders, there would continue to be ongoing speculation about rate rises.
But we believe the RBA should stay on the sidelines and maintain its watching brief for the rest of the year, he said.