news

RBA makes cash rate decision

By Lucy Dean

The Reserve Bank has announced its cash rate call following its monthly board meeting today.

In a move that was widely predicted, the RBA decided to maintain the current official cash rate at its record low of 1.50 per cent. The cash rate last moved in August 2016, ticking down.

Leading up to today’s meeting, all 33 experts in a finder.com.au survey predicted a hold verdict, while 90.23 per cent of brokers surveyed by HashChing also tipped that the RBA would keep the official cash rate on hold.

Speaking to sister publication Mortgage Business before the announcement, Digital Finance Analysis principal Martin North said he would be “extremely surprised” if rates were cut. Mr North said any future move outside of a hold would most likely be up, “unless there’s a really big external shock”.

Jordan Eliseo from ABC Bullion said there was “no compelling case” to move rates.

“Despite generally soft economic data … we expect the RBA will wait to see further evidence that the Australian property market is indeed cooling before cutting rates in the second half of this year,” Mr Eliseo said.

Pointing to weak business investment, BIS Oxford Economics’ Kishti Sen predicted a hold decision as rate cuts wouldn’t “improve business sentiment”.

“Recent increases in the residential property market have been too high. They won’t raise rates as underlying inflation is expected to remain close to 2 per cent over the next two years,” Mr Sen said.

Reflecting the industry consensus, head of investment strategy and chief economist at AMP Capital, Shane Oliver also foretold a hold decision.

“Not enough has changed since the last meeting, which saw the Reserve Bank get more optimistic about growth and inflation, and the fact that it’s too early to declare victory concerning the Sydney and Melbourne housing market will lead to a situation where they’ll leave rates on hold,” Mr Oliver said.

CoreLogic’s head of research Tim Lawless was more circumspect in his hypothesis. He predicted a hold verdict, but said a cut was possible in the future.

Mr Lawless pointed to signs of a slowdown in the Sydney and Melbourne housing markets and “softer housing conditions” as factors lending “further support to the notion that house price growth has moved through its cyclical peak”.

He said that this may “take some pressure away from the RBA to keep rates steady, especially given that other sectors of the economy other than housing seemingly need interest rates set at a lower level to what they currently are”.

However, Mr Lawless’ hypothesis lies in contrast to the majority of experts in the finder.com.au survey. Twenty-four out of 30 experts anticipated the next cash rate move to be a rise.

Most experts believe the rise will occur in 2018, but four said they could see a rate rise taking place between October and December this year.

Thank you.

Your enquiry has been sent to a local Aussie Mortgage Broker.

We will be in contact with you shortly.
Opps.

error occurred.
Unfortunately Aussie cannot attend to your home loan related enquiry at this stage as you must be a citizen or permanent resident.
Do you need help finding the right loan for your investment?
What Aussie do for you:
  • Give expert mortgage advice to help you find great investment loan deals
  • Help you maximise return by lowering financing costs
  • Save you time and effort by helping with the paperwork
First name
Last name
Location
Mobile Number
Are you an Australian Resident?
promoted stories

Top Suburbs

Highest annual price growth - click a suburb below to view full profile data:
1.
BLUE BAY 49.18%
2.
PAMBULA 43.5%
3.
BERKELEY VALE 42.74%
4.
POINT PIPER 40.52%
5.
NORTH TURRAMURRA 38.12%
RBA makes cash rate decision
SPI logo