The central bank’s cash rate decision has been revealed, following its monthly monetary policy board meeting. The Monetary Policy Decision full statement by Philip Lowe, RBA Governor can be found here. https://www.rba.gov.au/media-releases/2019/mr-19-11.html
Despite many economists expecting a cut, the Reserve Bank of Australia (RBA) has held the official cash rate at 1.5 per cent.
Most analysts (75 per cent) surveyed predicted the hold verdict; however, expectations of a cut have intensified over the past few months, particularly off the back of low inflation data reported by the Australian Bureau of Statistics (ABS) and a continued weak housing market.
Senior economist at AMP Capital Shane Oliver was among the 25 per cent of analysts who expected a rate reduction.
“Rate cuts were already on the way thanks to slower economic growth and the downturn in the housing cycle, but weaker than expected underlying inflation in the March quarter argues that the RBA should move sooner rather than later,” he said.
Treasurer of ING Australia Michael Witts agreed: “The inflation print is a concern for the RBA, notwithstanding the positive labour market, the RBA will be seeking to reflate the economy.
“It must be remembered that interest rate changes have a lagged impact on the economy.”
However, economist at Moody’s Analytics Katrina Ell said the unemployment rate would need to “consistently head higher” before the RBA makes a monetary policy adjustment.
Of the 38 analysts asked to predict the trajectory of monetary policy, 84 per cent predicted the RBA would cut the cash rate by August.
Despite some concerns that a cut would rekindle the housing boom, CoreLogic’s head of research, Tim Lawless, said that it would not provide the same stimulus to housing that it has in the past due to tighter credit conditions.
“If the cash rate does move lower later this year, a reduction in mortgage rates would provide some support for housing demand; however, we may not see quite as much stimulus for housing market conditions that we have seen after previous rate cuts,” he said.
“Generally, housing sentiment remains low and borrower mortgage serviceability is still assessed based on mortgage rates of at least 7 per cent.
“Households who already have a mortgage or prospective borrowers who are able to satisfy lender credit policies will be the winners if interest rates do fall later this year.”
Although it has been over 2 1/2 years since the Reserve Bank has moved the cash rate, lenders have still moved rates up themselves on more than one occasion. There may be a big difference between what rate your bank is offering you and what one of our lenders can offer you. Why not check what your rate is and then contact us to see how much we can beat it by.