RBA holds interest rates at 2 percent at February 2016 meeting

RBA holds interest rates at 2 percent at February 2016 meeting
RBA holds interest rates at 2 percent at February 2016 meeting

The RBA cash rate decision came out at 2.30 today with the decision to hold rates. The bank's last move saw it go to 2 per cent at the May 2015 meeting.

Today’s decision to keep the cash rate unchanged came as no surprise.

Mortgage Choice chief executive officer John Flavell said today’s decision by the Board was ‘unsurprising’.

Tim Lawless, CoreLogic RP Data head of research, said there were plenty of reasons why the RBA may have contemplated cutting the cash rate today.

He noted however the housing market was playing out exactly as the RBA probably would have hoped:  losing steam without a collapse in values. 

"The last three months have seen capital city dwelling values drift 0.6% lower and capital city home values are up by only 0.7% over the past six months."

"The RBA probably doesn’t need to worry too much about over stimulating the housing market via another rate cut; mortgage rates are already higher than a year ago due to the higher capital requirements implemented by APRA and the pace of investment growth has fallen below APRA’s 10% speed limit imposed in December 2014.  

"With heat in the housing market no longer likely to be a major concern for the RBA, a major obstacle has been removed from preventing rate cuts and we may see the cash rate move lower later in the year," Lawless said.

Laing+Simmons managing director Leanne Pilkington said she hoped the banks follow the RBA’s lead and keep their rates steady too.

“Certainly there’s no genuine impetus for the majors to move independently, aside from greed,” she said.

 

Tags: 
Interest Rates Rba Rate Decision

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