For the ninth consecutive month, the Reserve Bank of Australia has decided to leave the cash rate at the historically low rate of 2%. The decision comes in spite of weakening global markets, which are yet to fully affect us here in Australia.
Low oil prices as well as uncertainty surrounding China, Japan and the USA are on the Board’s radar, but for now the Reserve Bank is waiting to see how these markets will affect us in Australia.
Rather than react to these conditions, the Reserve Bank noted growth in non-mining sectors, rising employment levels and an increase in business lending as positive economic indicators. These factors, along with moderate economic growth, gave the Board no reason to alter the cash rate.
On the housing front, investment in property has slowed in the past few months, easing pressure in Sydney and Melbourne. Prices are still high in these cities, making Brisbane a more attractive option for many investors. Easing of these markets comes as welcome news and there is no current need to drop the cash rate to increase property spending.
In his statement, Governor Glenn Stevens said: “At today's meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target.”
“Over the period ahead, new information should allow the Board to judge whether the recent improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand.”
Many analysts are predicting that global pressures will lead to a cut at some point this year. For many home owners, however, this news won’t put them at ease. Banks lifted interest rates independently of the Reserve Bank last year and many are worried this could happen again.
The good news is that big banks are facing more competition from smaller lenders with competitive home loans. This means there a number of great interest rates available at the moment. If you are thinking of refinancing or switching to a fixed-rate home loan, call me to access the highly competitive deals that are around at the moment.
0419 733 862