Industry groups are calling on the Reserve Bank of Australia (RBA) to deliver cuts to interest rates when it meets next month.
According to the Real Estate Institute of Australia (REIA), the June 2013 quarter Consumer Price Index figures show the RBA’s consumer price measures of inflation are within their target zone and continue to slow down.
“In the June quarter, the consumer price index rose by 0.4 per cent and the annual inflation rate is now 2.4 per cent,” said REIA president Peter Bushby.
“These figures are well within the RBA’s target zone of two to three per cent and should provide a clear message to the board to further ease its monetary policy.
“Previously, the RBA indicated the inflation outlook could provide scope for further easing if it was needed to support demand.
“With inflation well under control and a subdued economy, it’s appropriate we see a further cut in interest rates when the RBA board meets in August.”
Senior economist for the Housing Industry Association (HIA) Shane Garrett said a weakness in the labour market and a mild inflation outcome for the June quarter provided an environment where a further rate cut was appropriate.
“June’s worrying increase in the unemployment rate to 5.7 per cent indicates a weakening economy in a setting where job security concerns remain a prominent handbrake on residential construction activity,” he said.
“Developments with regard to inflation provide the RBA with considerable room to manoevre on interest rates, so why wait and add to the existing uncertain mood as a federal election looms?”
Mr Garrett said a second rate cut on 6 August would bolster the prospects that the body of residential construction demands currently stuck in a pre-election holding pattern could be released.
“Historically weak levels of home building at a time of an ever increasing population is constraining Australia's growth and prosperity,” he warned.
“Commentary is widely focussed on another rate cut happening at some point - businesses and households are acutely aware of this. Holding off on a rate cut in August would simply add to the dominating mood of uncertainty.”