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No surprises as RBA leaves rates untouched

At its March Board meeting the Reserve Bank of Australia once again erred on the side of caution, leaving the cash rate on hold at 2%.


At its March Board meeting the Reserve Bank of Australia once again erred on the side of caution, leaving the cash rate on hold at 2%.

This is the 10th consecutive month that rates have been left untouched.

According to a statement by the Board, a mixture of strong and weak economic data ultimately encouraged them to leave the cash rate alone.

Consumer sentiment and property price growth are both up, while business confidence and housing approval figures have slid south in recent months.

According to the Westpac Melbourne Institute of Consumer Sentiment, confidence rose 4.2% in February, taking the Index to 101.3.

In addition, research conducted by CoreLogic shows property values continue to rise. Over the month of February, property prices climbed 0.5% across the combined capital cities, with Hobart, Adelaide and Brisbane the standout performers.

Over the 12 months to March 2016, property values across the combined capital cities have risen by 7.6% - which is a very strong result and serves to highlight the ongoing strength of the property market.

Further, new data from CoreLogic and Moody's Analytics found property prices will continue to rise moving forward – albeit at a slower pace than the past few years.  

But while property price growth and consumer confidence were both up, business confidence and building approvals took a hit.

Business conditions and confidence continue to deteriorate thanks to ongoing volatility in the economy.  

Furthermore, data from the Australian Bureau of Statistics shows the numbers of buildings approved for construction have fallen by more than 15% over the last 12 months.

So while rates were left on hold this month, future rate cuts cannot be ruled out.

Most analysts have pencilled in at least one more rate cut before the end of the year.

Regardless of what happens with the cash rate in the future, interest rates continue to hover around record lows, making now a good time to buy, invest or upgrade.

Posted in: Interest rates

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