Rates on hold

Rates on hold

07 December 2010 by Staff Reporter 0 comments

Jessica Darnbrough

The Reserve Bank of Australia has decided to leave the official cash rate on hold in December.

The Board was widely expected to leave the cash rate on hold at 4.75 per cent after lifting it 25 basis points last month.

RP Data's research director Tim Lawless said while inflation remains a concern for the Board, its rate hike last month had done enough to dampen any immediate inflationary threats.

"With home values down by a little bit less than one per cent between June and the end of October, the RBA is likely to be reasonably comfortable with the Australian housing market. Although the latest housing market figures from RP Data-Rismark don't include the market performance from the latest rate rise in November, it is safe to say that residential housing markets are no longer a threat to inflation," he said.

According to Mr Lawless, the RBA will be much more focussed on wage pressures fuelling inflation rather than house prices moving into the New Year.

"The recent Home Value Index figures from RP data-Rismark were probably the best case scenario as far as the RBA is concerned - home values have flattened rather than fallen markedly, which suggests a controlled transition out of the recent growth phase," he said.

 

Jessica Darnbrough

The Reserve Bank of Australia has decided to leave the official cash rate on hold in December.

The Board was widely expected to leave the cash rate on hold at 4.75 per cent after lifting it 25 basis points last month.

RP Data's research director Tim Lawless said while inflation remains a concern for the Board, its rate hike last month had done enough to dampen any immediate inflationary threats.

"With home values down by a little bit less than one per cent between June and the end of October, the RBA is likely to be reasonably comfortable with the Australian housing market. Although the latest housing market figures from RP Data-Rismark don't include the market performance from the latest rate rise in November, it is safe to say that residential housing markets are no longer a threat to inflation," he said.

According to Mr Lawless, the RBA will be much more focussed on wage pressures fuelling inflation rather than house prices moving into the New Year.

"The recent Home Value Index figures from RP data-Rismark were probably the best case scenario as far as the RBA is concerned - home values have flattened rather than fallen markedly, which suggests a controlled transition out of the recent growth phase," he said.

 

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