The Reserve Bank of Australia has today announced the official cash rate for August following its monthly board meeting.
The RBA sets the official cash rate target on the first Tuesday of every month except January and has again held the cash rate at a record low of 1.5 per cent, a move predicted by most industry experts amid mixed economic conditions.
All surveyed respondents on finder.com.au’s panel of industry pundits, predicted the central bank’s verdict.
Michael Yardney from Metropole Property Strategists observed: “There is no reason to alter interest rates. Our weakening housing markets, low inflation rate and soft wages growth suggest no rise in rates is imminent in the medium term. If anything this would dampen already sluggish consumer confidence which has already taken a hit over the last month.”
Chief Economist of Westpac Bank, Bill Evans said in the Westpac Weekly that despite this stability in the RBA cash rate, lending conditions in the housing market have tightened.
“The authorities have actively used macro-prudential measures, largely focused on investors,” he said, “while short-term rates have moved higher, evidence of increased funding costs. New lending for housing is declining and established property prices are easing, modestly to date, following strong gains – developments which will likely weigh on the economic outlook.”
Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low.
The RBA governor Philip Lowe stated today that global economic expansion is continuing, a number of advanced economies are growing at an above-trend rate and unemployment rates are low.
"Growth in China has slowed a little," he said, "with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States."
Mr Lowe also said that money-market interest rates are higher than they were at the start of the year, although they have declined somewhat since the end of June.
"These higher money-market rates have not fed through into higher interest rates on retail deposits," he said. "Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago."
Mr Lowe went on to say that conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent.
"This is largely due to reduced demand by investors as the dynamics of the housing market have changed," he said. "Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality."
You can also learn more about the RBA from the finder.com.au Reserve Bank Survey™ and how its decisions influence the interest rates banks charge, and learn about the best strategies for home owners and investors when there's a rate cut, hold or rise decision.
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