RBA ready to break record by doing nothing

If a hold does occur, this will be the 18th instance in a row that the cash rate has remained at the all-time low of 1.50 per cent, with the most recent cut happening on 3 August 2016.

The last time cash rates held for this long was between February 1995 and July 1996, where the cash rate held at 7.50 per cent.

Sally Tindall, spokesperson for RateCity, is expecting the cash rate holding record to be broken.

Ms Tindall said that the RBA board was set to blow the old record out of the water.

“The record might be set, but the end isn’t near. The Australian economy is stuck in neutral and Governor Philip Lowe’s hands are tied,” Ms Tindall said.

“The stalling of the long-awaited company tax cut is the latest thorn in the RBA’s side. The government’s claim that the tax cut will result in better paid jobs, one of the key drivers for a rate rise, won’t materialise until after May, if at all.

“Eighteen meetings with the cash rate unchanged at record lows is one for Australian home owners… [and] will be one for next week’s history books.”

Ms Tindall added that despite the cost of living rising, especially rising house prices, placing stress upon the budgets of many owners, current interest rates are a “silver lining”.

“Home owners who got into the market 10 or more years ago have reaped the most benefit from plunging interest rates. Not only are these people paying significantly less for their mortgages, they’ve seen the value of their homes grow significantly in some markets,” the money editor said.

“Investors have also benefitted from record low interest rates, which was one of the key drivers behind the recent housing booms in Sydney and Melbourne. More recently, they have had their belts tightened by APRA, but we should remember the rates investors pay even for interest-only loans today are low by historical standards.

“The combination of record low rates and increasing house prices means some investors now find themselves positively geared, even when they didn’t intend to be.”