With the election undecided and the drama of Brexit still playing out, now is a risky time to rock the boat with a cut to the cash rate. And given that the Reserve Bank of Australia does like to play it safe, the Board has decided to leave the cash rate at 1.75% for July.
While the nation is currently fixated on political drama, the Reserve Bank is focusing on our low inflation figures. It has a mandate to keep inflation between 2–3%, yet the latest set of figures came well below this.
In his statement following the meeting, Governor Glenn Stevens acknowledged that it’s still too early to tell what impact Brexit will have here in Australia. He pointed to continued growth in the economy as a good sign, but didn’t hide his concerns about inflation.
“Inflation has been quite low,” he explained. “Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.”
Looking ahead to the rest of the year
The next round of inflation data is released on July 27, and it will be received with keen interest from anyone hoping for another cut to the cash rate. As we saw in May, low inflation figures are often the trigger for rate cuts.
The result from the election will also play into next month’s decision, as we wait to see whether the new government will have any impact on consumer confidence.
Amid the chaos, the Reserve Bank is keeping a cool head, and home owners should do the same. Now that we are in a new financial year, it’s a great time to review your budget and home loan. Lenders are incredibly competitive right now and the prospect of another rate cut means there could be even more savings to be made on your mortgage.
The Brisbane property market stats you need to know:
- Official cash rate: 1.75%
- Brisbane median house sale price: $ 588,065*
- Brisbane median unit sale price: $ 408,750*
- Auction clearance rate: 17%
- Best available variable interest rate: 3.89%
- Best available fixed interest rate: 3.74% (for a two-year term)
*These are the latest RP Data figures from May, 2016, which are down on the median sales prices from April, 2016. They are based on data from the Brisbane City Council catchment only.
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