RBA holds at November 2016 Cup Day meeting
The RBA cash rate decision came out at 2.30 today with the decision to hold rates at 1.5 percent.
It noted inflation remains quite low. The September quarter inflation data were broadly as expected, with underlying inflation continuing to run at around 1½ per cent. Subdued growth in labour costs and very low cost pressures elsewhere in the world mean that inflation is expected to remain low for some time.
CoreLogic research director Tim Lawless said the decision to keep rates on hold was arguably one of the safer bets today, with the outcome widely anticipated by the market.
"The performance of the housing market was likely a key topic of discussion amongst RBA board members, with CoreLogic’s October results released today showing a further 0.5 percent rise in dwelling values across the capital cities," he said.
"Since the first rate cut this year in May, CoreLogic’s hedonic index has increased by 4 percent across the combined capitals, with more substantial rises reported in Sydney and Melbourne.
"With the cash rate on hold, mortgage rates are likely to remain at the lowest level since the mid 1960’s.
"It’s becoming more broadly accepted that such low mortgage rates have contributed to a renewed strengthening in housing market conditions despite lower transactional activity and rising affordability constraints, and policy makers would be reluctant to offer more stimulus to the already hot housing market performance."
Mortgage Choice chief executive officer John Flavell said he wouldn’t be surprised to see the cash rate remain on hold at 1.5% for some time yet.
“If the domestic economic data remains strong, there would be no immediate reason for the Reserve Bank to change their current stance on monetary policy,” he said.