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Staff Reporter
The Reserve Bank of Australia (RBA) has announced the outcome of its monthly board meeting.
The RBA decided that the cash rate will remain on hold at 2.50 per cent for October.
The decision to leave the cash rate was widely predicted, as consumer and business confidence edges higher and the real estate market continues to recover.
Loan Market director Mark De Martino said the RBA has been doing a good job of keeping the economy in check so far.
“With the encouragement of record-low interest rates and excellent buying conditions, property markets throughout the country have been running hot this spring,” Mr De Martino said.
Mr De Martino claimed that the cash rate moving only 25 basis points in six months, and 175 basis points in nearly five years, has been great for consumers looking for interest rate stability.
RP Data national research director Tim Lawless said the interest rate setting is currently providing an appropriate level of stimulus.
“Not only are home values up by 8.7 per cent since the recovery trend kicked off in June last year, there has also been a sharp improvement in the level of credit demand for new housing,” Mr Lawless said.
“Based on ABS [Australian Bureau of Statistics] housing finance commitments data, the number of mortgage commitments for new housing has risen by more than 50 per cent over the 12 months to July this year.”
Despite a robust property market trending upwards, there are a number of indicators still slowing the economy down, which could cause a rate cut in the near future according to Mr De Martino.
“If retail and construction don’t step up to the plate, we could see another rate drop as early as November and perhaps again in early next year, which is great news for homeowners,” he said.
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