The RBA’s decision to hold was largely expected and gives the bank time to assess the impact the last two cuts had on the Australian economy.
The latest economic data has provided the Reserve Bank with no incentive to reduce the cash rate again.
Encouraging news from the housing market reveals that dwelling values have stabilitsed. In fact, the CoreLogic Hedonic Home Value Index revealed that in July five of the eight capital cities recorded a rise, supported by a 0.2% increase in values in both Sydney and Melbourne.
On the other hand, It seems that two consecutive cuts to the cash rate, and tax relief from the Government, were not enough to improve consumer outlook. The Westpac Melbourne Institute of Consumer Sentiment revealed that consumer sentiment deteriorated in July, as concerns over the economy continue to weigh heavily on sentiment. On a positive note, the index revealed that housing-related sentiment improved in response to lower interest rates.
The latest monthly business survey from the National Australia Bank revealed that business confidence fell over June and while business conditions rose, they remain well below average.
RBA board members continue to track developments in the labour market. Given that the unemployment rate remained steady at 5.2% in the ABS’ most recent Labour Force Survey, the RBA may not have felt another cut was necessary this month.
Experts are saying that the next cash rate cut is just around the corner but the important thing for borrowers and future borrowers alike to keep in mind is that interest rates are currently sitting at historic lows.
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