October's Cash rate remains unchanged, thanks to a strong economy

October 01, 2013
Rikki Stanley

Positive economic data has encouraged the Reserve Bank of Australia to leave the official cash rate on hold at 2.50 per cent again this month.

Rising consumer sentiment, improving business confidence and increasing property prices have kept rates steady.

Consumer sentiment & business confidence have both seen dramatic improvement over the last month, hitting levels not seen in recent times.

While capital city dwelling values recorded 0.5% increase in August, contributing to a 7% increase since May 2012.

The decision by the RBA to keep the cash rate on hold presents a great time to review your current home loan to make the most of the low interest rates on offer, and makes borrowing more affordable if you are looking to get into the market.

If you would like to discuss how you can make the most of the rate hold please call us  to arrange a time.


Here's today's media release from the RBA's website for your info on their decision not to change the cash rate today: 

Media Release Number 2013-19

Date1 October 2013

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.

Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year.

Commodity prices have declined from their peaks, but generally remain at high levels by historical standards.

Inflation in most countries remains well contained.

Overall, global financial conditions remain very accommodative.

Changes in the outlook for US monetary policy have increased volatility in financial markets, but long-term interest rates remain very low and there is ample funding available for creditworthy borrowers.

In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment.

The unemployment rate has edged higher.

There has been an improvement in indicators of household and business sentiment recently, though it is too soon to judge how persistent this will be.

Inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with the effects of the lower exchange rate.

The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values.

The full effects of these decisions are still coming through, and will be for a while yet.

The pace of borrowing has remained relatively subdued to date, though recently there have been signs of increased demand for finance by households. There is also continuing evidence of a shift in savers' behaviour in response to declining returns on low-risk assets.

The Australian dollar rose recently, but is still about 10 per cent below its level in April.

A lower level of the currency than seen at present would assist in rebalancing growth in the economy.

At today's meeting, the Board judged that the setting of monetary policy remained appropriate.

The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.


For more information, see http://www.rba.gov.au/media-releases/2013/mr-13-19.html

Posted in: Interest rates

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