April 05, 2016
At its April Board meeting, the Reserve Bank of Australia judged it was prudent to leave the official cash rate on hold at 2%.
This decision marks the 10th consecutive Board meeting that the Reserve Bank has opted to leave the cash rate untouched.
Mortgage Choice chief executive officer John Flavell labelled the decision “completely unsurprising” and said the Reserve Bank was given no incentive to change their stance on monetary policy.
“The Australian economy is tracking along quite well at present. Property prices across the combined capital cities continue to rise slightly month on month, unemployment remains relatively stable as does both consumer and business sentiment,” he said.
“With that said, it was all but certain that the Reserve Bank of Australia would choose to leave the official cash on hold. Moving forward, I would expect the cash rate to stay on hold for some time yet.”
Data from CoreLogic found property values across the combined capital cities rose 0.2% over the month of March, taking prices 1.6% higher for the quarter.
Sydney, Perth and Darwin were the standout performers in terms of price growth, with values climbing by 1%, 1.2% and 2.1% respectively over the month of March.
The strong property price growth wasn't the only positive news to come out of the economy over the last month. Research conducted by the Australian Bureau of Statistics found the unemployment rate fell 0.2 points to 5.8%, while the National Australia Bank monthly business survey recorded a strong rebound in business conditions.
Meanwhile, the Westpac Melbourne Institute of Consumer Sentiment found confidence continues to hover around its average reading.
“All of these data points would strongly suggest there is no trigger for a rate cut or rate hike,” Mr Flavell said.
“As such, the official cash rate could continue to sit at the historical low of 2% for many more months. And, while several economists were predicting a May rate cut at the beginning of the year, this now seems unlikely.”
Regardless of what happens with the cash rate in the future, Mr Flavell said interest rates are low, making now a good time for Australians to buy, invest or review their current loan.
“For anyone who isn't happy with their current home loan provider or feel as though they could be getting a better deal, now is a great time to review your home loan and make sure you are still in the right product for your needs.”