• Aron Cardona - Mortgage Broker Northern Beaches

RBA makes October cash rate call

The Reserve Bank of Australia (RBA) has made it two consecutive months of inactions for Australia’s official cash rate.

In what was a widely predicted outcome, today’s RBA board meeting ended with the cash rate remaining at 1.5%, the same outcome that occurred after September’s board meeting.

Despite it having a number of factors to weigh up in making the decision, CoreLogic head of research Asia Pacific Tim Lawless said today’s decision is unlikely to come as a shock.

“After two rate cuts earlier in the year, the Reserve Bank’s decision to hold the cash rate at their historically low level of 1.5% came as no surprise,” Lawless said.

“Housing market conditions were almost certainly one of the topics discussed at the board meeting, as well as the stubbornly high Australian dollar, an inflation rate that is well below the target range of 2-3% and a remarkably strong rate of GDP growth released for the June quarter,” he said.

In terms of the housing market, Lawless said the RBA is likely comfortable with indications price growth is slowing. CoreLogic figures shows combined capital city prices grew at 7.1% in the year to September, which is significantly slower than the growth seen over the previous 12 months.

“A year ago capital city dwelling values were rising by 11% per annum. Importantly, while growth conditions in the housing market have slowed, Sydney and Melbourne continue to record strong capital gains, albeit substantially lower than a year ago,” Lawless said.

Lawless said supply levels and worsening affordability will likely continue to drag on price growth in the near future, however there are indications investors are becoming more active and the RBA is unlikely to make any decisions that results in price growth speeding up.

“Clearly, the housing market is diverse and low interest rates are only one factor that is influencing conditions. The RBA is likely to be monitoring the housing market closely, looking for any signs of accelerating capital gains in the larger markets, or a ramp up in speculative investment activity,” Lawless said.

28 views0 comments

Recent Posts

See All