No change: RBA March 2016 cash rate decision

No change: RBA March 2016 cash rate decision
No change: RBA March 2016 cash rate decision

The RBA today held rates at 2 percent.

The decision from the RBA came as no surprise today, considering labour markets are holding up and housing market conditions have moderated but remain firm, Tim Lawless at CoreLogic RP Data said.

"The fact that the rate of capital gains has wound down across the housing market and investor activity is reducing from the highs of mid last year are likely to be welcomed developments from the Reserve Bank.

"Based on indices data released today by CoreLogic, capital city dwelling values rose by 1.4% over the most recent three month period and by 7.6% over the past twelve months; a substantial slowdown from the strong housing market conditions that were evident over the first half of 2015."

Lawless suggests if the RBA were to provide another cash rate cut later this year, they probably wouldn’t need to worry too much about over stimulating the housing market; mortgage rates are already higher than a year ago due to the higher capital requirements implemented by APRA and the pace of investment credit growth is tracking well below the 10% speed limit imposed in December 2014. 

"With inflation tracking around the bottom of the RBA target range of two to three per cent, the Reserve Bank can work to stimulate the economy by dropping the cash rate further if they see a requirement to do so."

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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