What will it take for the bank to lift the rates – and how will it impact property investors?
The stronger than expected recovery outlined in Tuesday’s budget now has leading commenters expecting the RBA could li...
The central bank today decided to keep the official cash rate on hold following the release of better than expected inflation data last week.
The Consumer Price Index (CPI) rose 3.1 per cent in the year to June quarter, slightly above the RBA's target level of 2-3 per cent.
Glenn Stevens, Reserve Bank of Australia (RBA) governor, said the current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade.
"With growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the board judged this setting of monetary policy to be appropriate," Mr Stevens said.
AMP chief economist Shane Oliver said despite a similar prediction, the RBA still retains a clear tightening bias and will continue to keep inflation within target levels.
"The RBA will continue bearing down on the economy," Mr Oliver recently told First Property Buyer.
Mr Oliver added that high export prices coupled with improved business investment, consumer spending and solid employment recovery will see rates reach "near top" levels of 5.5 per cent by end of 2011.
RP Data senior research analyst Tim Lawless has welcomed the RBA's decision to keep rates on hold, saying the slowdown in market conditions has called for a rate halt.
"Month to month capital gains in Australia's capital city housing markets had been trending downwards since January and slipped into the negatives with a result of -0.7 per cent in June," Mr Lawless tsaid.
"The slowdown in Australia's capital city housing markets, together with a moderate CPI figure which was below market expectations, would have been an important consideration by the Bank to keep rates on hold."