The Reserve Bank of Australia has announced the result of its monthly meeting in regards to the official cash rate.
The outcome of the meeting was as expected by most experts and commentators, with the RBA deciding to keep the cash rate on hold at the record low of two per cent.
All 31 of finder.com.au’s panel of experts correctly predicted that there would be no change to the cash rate in August, with 55 per cent forecasting that interest rates will begin to rise in 2016.
LJ Hooker chief executive Grant Harrod said while a rate cut would’ve benefited some capital cities such as Adelaide, Hobart and Darwin, changes to investor lending could help to cool down east coast prices which took pressure off the RBA to make further cuts.,
“I just don’t think there are enough compelling reasons for a reduction while it would be favourable for markets outside of Sydney,” Mr Harrod said.
“A rise at this stage is also not justified with latest economic figures and with consumer sentiment being a bit depressed, I think the safe haven for the RBA is to just stay where they are at.”
Mr Harrod also believes the softening Australian dollar contributed to the RBA’s decision to keep the cash rate on hold, giving them more time to see how the economy is tracking before making any changes.
ING Direct treasurer Michael Witts agreed saying “the exchange rate has started to move lower and this will lessen the pressure for further Reserve Bank cuts for the moment as broader sectors of the economy benefit from the lower exchange rate.”
Prior to today’s meeting Peter Boehm, from onthehouse.com.au, said he would’ve been ‘very surprised’ to see the cash rate move in either direction in August.
“It’s too early to start increasing rates and I cannot see the economic or financial justification for further rate cuts at this point. I think we'll see some interest rate stability over the coming months,” Mr Boehm said.