February 02, 2016
The Reserve Bank of Australia has kicked off its first Board meeting for the year with more cash rate stability.
At today's Board meeting, the Reserve Bank of Australia decided it was prudent to leave the official cash rate on hold, marking the ninth consecutive month that the cash rate has been left at 2%.
Mortgage Choice chief executive officer John Flavell said today's decision by the Board was ‘unsurprising'.
“While there is still scope for the Reserve Bank of Australia to cut the cash rate over the coming months, the trigger for an immediate cash rate cut was not there this month,” he said.
“Data from CoreLogic RP Data shows property values continue to climb fairly steadily across most capital cities, with values increasing 0.9% over the month of January. In addition, business confidence and conditions remain surprisingly robust, while underlying inflation remains within the Reserve Bank's target band range.”
New data from the Australian Bureau of Statistics found the key measures of underlying inflation rose by 0.55% on average throughout the fourth quarter, while annual inflation hit 2% - still within the Reserve Bank's 2%-3% target band range.
“Moving forward, the Reserve Bank will continue to keep a close eye on inflation, property prices and consumer confidence,” Mr Flavell said.
“While the latest spate of economic data has given the Reserve Bank no reason to cut rates, who knows what tomorrow will bring. With that said, it is impossible to rule out future rate cuts at the moment.
“At present, consumer sentiment is sluggish and it could fall further still, which would provide the Reserve Bank with the incentive they need to cut the cash rate.”
According to the latest data from the Westpac Melbourne Institute of Consumer Confidence, sentiment dropped 3.5% over the month of January, taking the Index to its lowest level since September 2015.
Regardless of what happens with the cash rate in the future, Mr Flavell said interest rates continue to hover around record lows, making now a good time to buy, invest or upgrade.
“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 also a great time for property owners to review their home loan and make sure they are still in the right product for their needs.”
