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Cash rate on hold

Cash rate on hold

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Staff Reporter

The Reserve Bank of Australia (RBA) has left the official cash rate on hold for the second consecutive month.

At its board meeting earlier today, the Bank said it was prudent to leave the official cash rate at a historic low of 2.75 per cent.

RP Data’s Cameron Kusher said he was “unsurprised” by the decision.

Speaking to Real Estate Business, Mr Kusher said the board would no doubt be comfortable with the way the economy is tracking, with capital city dwelling values climbing by 3.8 per cent over the last financial year.

“While we are still a long way from the buoyant conditions we experienced in 2009, it seems the lower mortgage rates are starting to have a positive impact on the housing market," he said.

“Moving forward, we expect to see continued improvement in the housing market.”

Real Estate Institute of NSW (REINSW) chief executive officer, Tim McKibbin said with just one rate cut this year it was disappointing to see interest rates unchanged.

“It was time to act again. We really need to see further cuts from the RBA to support the interest rate reduction in May.

“There are many people who are hurting at the moment and another interest rate cut is necessary to support the property market,” Mr McKibbin said.

The RBA has cut interest rates once in 2013, by 25 basis points at its meeting in May. Last year, the RBA lowered interest rates four times, with falls of 25 basis points in December, October and June and 50 basis points in May.

While the Real Estate Institute of Australia (REIA) said interest rate cuts over the past 12 months have been most welcome, but today’s Reserve Bank of Australia (RBA) decision to leave the cash rate on hold has left room for further cuts later on.

“REIA was pleased the RBA cut rates to a historically low figure in May, but we didn’t expect it to ease monetary policy further today,” REIA president Peter Bushby said.

In May, the RBA cut the cash rate to 2.75 per cent. The standard variable interest rate now sits at 5.9 per cent, 0.3 percentage points lower than the level recorded three months ago.

“The market has been reacting positively on the recent cash rate cuts. The first quarter of 2013 had the seventh consecutive improvement in housing affordability.”

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