After lenders delivered out-of-cycle rate increases this month, borrowers were hoping for an early Christmas gift in the form of a November rate cut yesterday. While this was not to be, the Reserve Bank’s decision to leave rates on hold indicates the economy is getting back in shape.
Following the decision, RBA Governor Glenn Stevens said: “The Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting.
“Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.”
Data shows that the housing market is cooling – which has been a concern all year – and figures from the Westpac Institute of Consumer Sentiment found that consumer confidence rose by 4.2% in October. Add this to the security of a new government now settled in to office and the outlook for business and consumer sentiment is looking good.
It’s unlikely that we’ll see any changes in interest rates for the remainder of this year. If we do, however, there’s no guarantee that lenders will pass on the full savings to borrowers.
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