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The RBA has announced the results of its November board meeting regarding the official cash rate, following weeks of market speculation.
The Reserve Bank of Australia has announced the results of its latest board meeting, with Australia’s official cash rate set to remain at its current record-low of 2.00 per cent for another month.
Predictions on the outcome of the meeting were divided, with many market commentators expecting recent moves by the big four banks to up variable home loan rates to result in a drop to the official cash rate.
With cash-rates on hold for another month, anticipation of a rate cut in the near future has ramped up.
Alan Fox, who predicted that the decision could go either way, believes the RBA is set to cut rates within a matter of months.
“The next rate movement by the RBA will be a cut – it just waits to be seen if they do it before Christmas to stimulate retail spending or they wait until 2017,” he said.
Property academic and author Peter Koulizos predicted that rates would remain on hold for November, but warned that a further increase to unemployment figures would likely trigger a future cut to rates.
“If the unemployment figure increases again this month, I think Australian consumers can look forward to an interest rate cut in the first week of December; an early Christmas present!
Tim Lawless, CoreLogic RP Data head of research, agrees that conditions look set to favour a future rate cut, but warned investors not to expect any relief from the banks.
“The recent out of cycle increase in mortgage rates will likely provide the RBA with some additional wiggle room when it comes to considering a rate cut either later this year or early next year. If we do see official interest rates fall over coming months, there is a high likelihood that the full cut won’t be passed on to borrowers, considering the higher capital requirements placed on residential mortgages by the prudential regulator, APRA,” he said.