RBA holds again in July

RBA holds again in July
RBA holds again in July

The RBA cash rate decision came out today with the rate unchanged at 1.5 percent.

The bank's last move saw it go to 1.5 percent at the August 2016 meeting.

It noted rising prices were easing and that some markets had declining prices.

Laing+Simmons Managing Director Leanne Pilkington said the RBA’s decision to leave rates on hold was the right one.

"A steady interest rate environment will continue to be crucial as the country – and mortgage holders – navigate various economic and political uncertainties.

“In the past week we’ve read reports that rates could move higher sooner rather than later, and that compounding rises over a relatively short period may materialise. This could jeopardise the safe landing that the Treasurer has prioritised,” Ms Pilkington says.

“Our forecast remains that there will be no further reduction to the Official Cash Rate (OCR) in 2017,” said HIA principal economist, Tim Reardon. 

“Comments issued by the Reserve Bank Governor today highlight that housing prices have been rising briskly in some markets and declining in others. 

“These patchy outcomes are consistent with the easing of conditions in the housing market. 

“The pressures on the RBA to respond to developments in the housing market have eased as the major mortgage lenders moved to increase interest rates on a number of riskier mortgage lending products. 

“Furthermore, the latest dwelling price figures showing that the market for established properties in the east coast capital cities may be cooling is likely to provide additional comfort," he said.

CoreLogic head of research Tim Lawless said it came as no surprise that the RBA has held the cash rate at 1.5 percent for its tenth consecutive meeting today.

"The decision comes on the back of upbeat labour market reports, with unemployment falling to 5.5 percent since the last meeting and a trend towards more job advertisements," he said.  

"While the jobs market appears to be strengthening, other factors remain subdued, with wages growth tracking along record lows at just 1.9 percent per annum and core inflation below the target range of 2-3 percent.

"Furthermore, a steady cash rate from the RBA against increasingly hawkish sentiments in Europe and the US stand to put downward pressure on the Australian dollar. This would serve as a welcome boost to Australian exports.

"Importantly, the housing market is showing signs of slowing, with CoreLogic’s home value indices reporting a 0.8 percent rise in dwelling values over the June quarter; the lowest quarterly growth rate since December 2015. 

"A controlled slowdown in housing market conditions would provide some comfort to policy makers that new macroprudential constraints are working to cool the high rate of capital gains in Sydney and Melbourne. 

"While the cash rate has remained on hold, the same can’t be said for mortgage rates, which have been edging higher since September last year. 

"Arguably, higher mortgage rates have done much of the heavy lifting in slowing down home value appreciation and cooling investment demand.  

"There is an expectation that mortgage rates will continue to rise, despite a steady cash rate setting, as lenders adjust their credit policies to accommodate the latest round of APRA mandates. 

"If this is the case, we expect investment activity will continue to moderate across the housing market, which could dampen housing market conditions further. 

"Slower housing market conditions and improvements in employment markets are certainly positive outcomes, however if wages growth and inflation remain subdued we can expect the cash rate to remain on hold over the short term."

Tags: 
Interest Rates Rba Rate Decision

Comments

Be the first one to comment on this article
What would you like to say about this project?