After its first meeting for 2016, the Reserve Bank of Australia has opted to leave the cash rate on hold at 2%. The decision was made amid a volatile global economy that’s being affected by low oil prices and falls in global equity markets.
Despite these global conditions and our own sluggish start to the year here at home, Australia has been experiencing surprisingly high job growth, with 130,000 new jobs created since October. The low Australian dollar is boosting sectors such as tourism and services, and a number of non-mining sectors are also performing well.
In his statement, Governor Glenn Stevens said: “At today's meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate.”
Until it becomes clearer how global markets will affect Australia, it’s unlikely the Reserve Bank will move to cut the cash rate. Globally, other central banks have been lowering cash rates, which many economists predict will put pressure on the Reserve Bank to follow suit.
Despite this speculation that a rate drop could be on the cards, borrowers are concerned about independent interest rate increases from lenders. After a number of major lenders raised interest rates late last year, more borrowers have been moving to fixed-rate home loans.
Rather than buying into speculation, I recommend that buyers do their own homework and shop around for the best deal.