RBA holds official cash rate in first meeting of 2019

RBA holds official cash rate in first meeting of 2019
RBA holds official cash rate in first meeting of 2019

The February meeting of the RBA has seen the cash rate remain on hold at 1.5 percent.

It has now stayed at record lows for 27 consecutive meetings. 

The last time the rate changed was in August 2016.

CoreLogic's head of research Tim Lawless said the declining house price market will likely put pressure on the RBA in the future, however he predicted a hold at today's meeting.

"The RBA has looked past the housing downturn which has gathered some momentum over the past three months", Lawless said.

"The hold decision was widely anticipated, considering a subtle uplift in CPI and steady labour market conditions, however financial markets are increasingly leaning towards the next move from the RBA being a cut rather than a hike. 

"With CoreLogic’s January hedonic index revealing national dwelling values are falling at the fastest rate since the GFC, while Sydney and Melbourne’s rate of decline is now the most rapid since at least the early 1980’s, there is the potential the RBA may be becoming less comfortable with the performance of the housing sector. 

"Add to this a consistent downtrend in dwelling approvals, weakening consumer sentiment and softer retail trade figures, and it looks like the household sector could start to weigh down economic growth. 

Figures released by the ABS yesterday showed dwelling approvals declined to lows not seen since 2018.

Lawless said the RBA may consider a rate cut due to a number of out of cycle rate hikes.

"The weeks preceding the RBA meeting saw several smaller lenders pushing mortgage rates higher in response to persistently high funding costs, following an average 14 basis point rise in owner occupier mortgage rates since September last year. 

"If we see mortgage rates rising more broadly, we might see the RBA become more willing to consider a rate cut in an effort to offset higher funding costs and support heavily indebted household balance sheets."


Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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