Strong property price growth in Sydney and Melbourne combined with growing problems abroad has encouraged the Reserve Bank of Australia to leave the cash rate on hold.
Rates on hold as RBA keeps a close eye on international issues
At today’s Board meeting, the RBA decided to err on the side of caution and leave the cash rate on hold at 2% for the second consecutive month.
Recent research conducted by RP Data shows property values rose significantly in both Sydney and Melbourne throughout the month of June, with prices rising by 2.8% and 2.9% respectively.
If rates were cut, property prices could climb even further – something the Reserve Bank is keen to avoid. As such, it makes sense for them to leave rates on hold for the time being.
Further, the ongoing turmoil in Greece has caused the Australian share market and dollar to plummet, giving the RBA even more reason to leave the cash rate untouched.
Reserve Bank of Australia - Media Release