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RBA ends year with no change to rates

The Reserve Bank of Australia has today ended the year just as it began – with no changes to the official cash rate.

The Reserve Bank of Australia has today ended the year just as it began – with no changes to the official cash rate.

Today's decision to leave the official cash rate on hold at 1.5% marks the 16th consecutive month that the cash rate has been left at this historically low setting.

The last time we saw this prolonged period of interest rate stability was back in 2013/14 when the cash rate was left on hold for 17 consecutive months.

The latest data would suggest the Australian economy is performing relatively well at the moment and doesn't need to be helped or hindered by a change to the cash rate.

Property price growth has stagnated across Australia, which is in line with expectations. According to the latest data from Core Logic, property values across the combined capital cities fell by 0.1% over the month of November.

At the same time, consumer sentiment took a bit of a tumble, with pessimists once again outweighing optimists. In addition, inflation is currently sitting at 1.8% - slightly below the Reserve Bank's target band range of 2-3%.

On a positive note, business conditions hit a new high in October, according to National Australia Bank's latest monthly business survey.

Pleasingly, the strength in business conditions was quite broad based and felt across most industries. Even retail rallied throughout October.

When you look at all of this economic data, it is clear that the Reserve Bank of Australia's decision to leave the cash rate on hold for an extended period of time is having the desired effect on the economy

Nevertheless, it is only a matter of time before the Reserve Bank does look to increase the cash rate.

Regardless of what the Reserve Bank does or doesn't do to the cash rate in 2018, interest rates are currently sitting at record lows and will remain lower for longer.

As such, for anyone who is looking to buy a property in the New Year, now is a good time to start that process.

Posted in: Interest rates

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