The Reserve Bank of Australia has made its decision on the cash rate for June 2021.
It’s keeping the cash rate at the record-low level of 0.1 of a percentage point — continuing the “lower for longer” theme that’s been in place since the onset of the pandemic.
The announcement flies in the face of the recent Commonwealth Bank announcement which revealed the lender would be lifting rates across its three and four-year owner-occupier loans and investor loans.
Weighing in on the decision to maintain the cash rate, CreditorWatch’s chief economist, Harley Dale, said updates on the economic recovery of Australia post-COVID-19 “remain largely positive”.
He’s touted “better-than-expected outcomes for the business sector and red-hot property prices”.
From his perspective, “the synchronisation of expansionary fiscal policy and ultra-low interest rates are clearly paying dividends, and the Reserve Bank of Australia appears quite comfortable with the current situation as the central bank holds fast on interest rates until the dynamics of Australia’s inflationary pressures change”.
He forecasts that the second half of the year “will be an important time for boosting business investment and ensuring Australia’s economic recovery remains durable”.
Coinciding with the rate reveal, CoreLogic’s head of research, Tim Lawless, has reaffirmed that “the fundamentals driving strength in the housing market remain in place” as national home values continue to lift.
CoreLogic reported that its national home value index pushed up by 2.2 per cent over the month of May.
“The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn, has created persistently strong demand for housing,” he said.
“At the same time, advertised supply remains well below average. This imbalance between demand and supply is continuing to create urgency among buyers, contributing to the upwards pressure on housing prices.”
