For the sixth month in a row, the Reserve Bank of Australia has decided to leave the cash rate on hold at 2%. As punters were placing Melbourne Cup bets, they were hoping for another win in the form of a rate cut. But with the housing market beginning to plateau and consumer sentiment up in October, the Reserve Bank saw no reason to alter the cash rate for November.
That means no early Christmas gift for home owners, many of whom faced out-of-cycle interest rate rises from major lenders last month. Since Westpac decided to lift its rates, eight other lenders have followed suit. In the eye of the Reserve Bank, however, this won’t have a dramatic impact on key economic indicators.
Speaking yesterday, RBA Governor Glenn Stevens said: "Low interest rates are acting to support borrowing and spending. While the recent changes to some lending rates for housing will reduce this support slightly, overall conditions are still quite accommodative.”
"Credit growth has increased a little over recent months, with growth in lending to investors in the housing market easing slightly while that for owner-occupiers appears to be picking up,” he continued.
For now, it seems as though interest rates will remain on hold for the rest of the year, with a rise likely to take place next year. But as we saw on Cup day, nothing is a sure bet.