At its first Board meeting for 2017, the Reserve Bank of Australia announced it would leave the official cash rate on hold.
Today’s decision marks the sixth consecutive month that the official cash rate has been left on hold at the historical low of 1.5%.
Speaking about the Reserve Bank’s announcement, Mortgage Choice chief executive officer John Flavell said it was “safe and unsurprising”.
“Amidst a lot of domestic and global uncertainty, it wasn’t surprising to see the Reserve Bank of Australia take the safe option and leave the official cash rate on hold,” he said.
“According to the Westpac Melbourne Institute of Consumer Sentiment, confidence is broadly the same as it was last month – which is significantly down from the highs we have seen in previous months.
“At the moment, pessimists significantly outweigh the number of optimists. In addition to the lacklustre confidence readings, Australia recently recorded its lowest annual inflation rate in 19 years.
“Data from the Australian Bureau of Statistics found the December quarter inflation result was just 0.5%, while the yearly price growth was just 1.5% - far below the Reserve Bank’s 2% - 3% target band range.
“All of these factors combined gave the Reserve Bank of Australia all the incentive it needed to leave the official cash rate on hold for another month.”
Moving forward, Mr Flavell said future rate adjustments cannot be ruled out.
“Nobody knows what the future will bring. Depending on what happens both here and abroad, the Reserve Bank could really decide to do anything with the cash rate,” he said.
“While the future is uncertain, one thing is clear: rates are currently sitting at near-historical lows, which is great news for existing property owners and potential property buyers.”
Mr Flavell said anyone who is concerned about the future, should take the time to review their current financial situation and make sure they are in the right products for their needs.
“If you have a mortgage and are worried about the future, it may be worth considering your fixed rate options,” he said.
“Of course, anyone who is thinking about reviewing their financial situation should take the time to speak to their local mortgage broker.”