May 07, 2013
The RBA has surprised today in its rate announcement.The Reserve Bank bucked expectations in cutting the official cash rate 25bps to 2.75%. An AAP survey of 13 economists found none expected the RBA to move on rates today, but RP Data research director Tim Lawless said the decision may have been partly due to weakness in home building. "What may have been most concerning to the RBA is the pace of dwelling construction and consumer appetite for newly constructed homes. Dwelling approvals and commencements remains weak and although new home sales have improved, according to the HIA, the number sold remains historically low. If we are to see the construction sector pick up where the mining boom is leaving off, lower interest rates may be the catalyst that is required.
Mean while Western Australia with a stronger economy than the other states is savouring the decision to keep rates low.