The decision from RBA Board members to pause their cutting spree will give the last three cash rate reductions time to absorb into the economy.
The latest domestic economic data has provided the Bank with some breathing room.
Data from the labour market showed that the unemployment rate fell to 5.2% in September. And, while this would have been welcome news to policy makers, it is still far off the RBA’s unemployment target of 4.5%, which suggests that another rate cut may be on the cards in the coming months.
In other positive news for policy makers, inflation grew over the September quarter, rising 0.5% from the June 2019 quarter. On the other hand, the annual rate of inflation rose 1.7% over the twelve months to September 2019, which is below the RBA’s target range of 2-3%.
The property market continues on its road to recovery, with the CoreLogic Hedonic Home Value index revealing that national dwelling values rose for the fourth consecutive month in October. The growth, which until recently had been limited to Sydney and Melbourne, was more widespread over the month of October with seven of the eight capital cities recording gains.
According to the Westpac-Melbourne Institute of Consumer sentiment, consumer sentiment fell in October to the lowest level of the index since July 2015. Policy makers are acutely aware of the vital role consumers play in the economic growth outlook, but given that consumers tend not to react favourably to cash rate reductions, it was prudent for the RBA to hold off from delivering yet another back to back cut.
There is a lot of speculation that another cash rate cut is bound to happen, which means that if you are in a variable rate home loan, you should be prepared to negotiate a better home loan deal, or speak to an experienced mortgage broker who can haggle with lenders on your behalf.
Your local Mortgage Choice mortgage broker can help you find out what your options are and compare home loans from our panel of lenders to help you decide if there is a more competitive home loan on the market for you.