The Reserve Bank of Australia has announced the outcome of its monthly board meeting.
The official cash rate has been left on hold at 2.5 per cent, where it has remained since rates dropped from 2.75 per cent in August 2013.
The decision by the RBA will leave few commentators and economists surprised. Ahead of today’s announcement, comparison website finder.com.au revealed all 28 of its expert panellists expected rates to remain at 2.5 per cent.
Mortgage and consumer finance expert Lisa Montgomery said with inflation consistent with targets, the RBA will continue to leave rates on hold for the remainder of this year, but will be weighing up a number of competing factors in coming months.
“The Board will be keeping a keen eye on the data released in the first week of October, particularly in relation to building approvals and new home sales,” she said.
“The Board remain concerned in relation to their view of the Australian housing market being ‘unbalanced’ and the potential effect on future household spending. That said, the retail trade and private sector credit numbers should remain encouraging when released this week.”
LJ Hooker chief executive officer Grant Harrod went one step further and said interest rates would remain on hold until the end of 2015.
Mr Harrod also said the RBA’s policy of stability over the past year had aided the economy by stimulating the housing market and offsetting the fall in mining investment.
“It has been an encouraging start to the spring market and while buyers are aware rates won’t stay at historic lows forever, like investors, there is continued confidence about the market which is reflective of the stability in policy.
“However, while markets such as Sydney and Melbourne have performed well, there are many other markets which have softened or experienced more modest results.”
Mortgage Choice spokesperson Jessica Darnbrough agreed that today’s decision was largely unsurprising, but said the RBA is looking at ways to reign in investor spending and speculation.
“Despite the fact that the Reserve Bank of Australia has said something needs to be done to cool the property market, the official cash rate was left on hold again this month.
“Last week, the Reserve Bank of Australia gave its clearest signal yet that it would take action to restrain the surging property market, after assistant RBA governor Malcolm Edey told a Senate committee that “excessive speculative activity” was causing concern.
“The RBA's decision to leave the official cash rate on hold this week was largely unsurprising, as the latest Westpac Consumer Sentiment Survey found confidence fell significantly in September – dropping 4.6 per cent. In addition, research conducted by RP Data shows housing values eased their way into spring, with property prices climbing just 0.1 per cent across the combined capital cities in September. These two things combined made it impossible for the Reserve Bank to lift rates this month.”