December rate decision announced

By Jack Needham

The Reserve Bank of Australia has made its final interest rate decision of 2015 at its monthly board meeting.

The RBA board confirmed most people’s expectations this afternoon by leaving the official cash rate at a record-low setting of 2 per cent, where it has been since May.

That decision is in line with the predictions of the four property experts Smart Property Investment spoke to prior to the decision.

Cate Bakos, director of Cate Bakos Property, said that comments from RBA governor Glenn Stevens in November and current economic indicators pointed to rates remaining on hold today.

“I don’t feel that we are in for a rate cut this December. Our economic indicators are a little bit mixed but, more to the point, Mr Stevens has already hinted that we aren’t likely to have a cut. Our September data won’t be released until after Tuesday’s announcement, and economists aren’t anticipating too many shocks,” she predicted.

That sentiment was echoed by Liz Sterzel, managing director of Property Wizards, who added that the RBA was likely looking to promote economic stability by keeping rates on hold. 

“If the RBA needs to stimulate growth through interest rate cuts they are willing and able, but they will only do this if it is likely to have a positive effect,” she said.
“Mr Stevens has also noted that interest rate cuts have less of a stimulating effect than they once did, due to rates already being at record lows, and a rate cut may not be the most effective strategy at this time,” she added.

With the RBA resolving to keep rates on hold, the focus now shifts to the first rate announcement of 2016, in February.

“It will be 'steady as she goes' for now, but depending on how the retail sector performs over the Christmas/New Year period, it could have a big bearing on what happens on the first Tuesday in February 2016,” property academic and author Peter Koulizos said.

Alan Fox, managing director of Propertunity, said: “The RBA will want a big retail spend for Christmas – so won’t raise rates, but there may be a need to cut rates in 2016 – but that is for next year.”

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