Global events may be shaping RBA's interest rate decisions: Buyer's agent

Global events may be shaping RBA's interest rate decisions: Buyer's agent
Oliver WisniewskiNovember 6, 2014

The Reserve Banks’s (RBA) decision to keep interest rates on hold earlier this week came as no great surprise.

Of the 33 economists surveyed by Finder prior to the meeting, 91% expect rises in 2015, while two tipped 2016 as the earliest date for an increase.

But the lack of interest rate movement, the Bank has now left interest rates on hold for 16 consecutive months, has one property expert scratching his head.

Buyer’s agent and founder of Dream Design Property, Zaki Ameer, says that the RBA’s usual reaction to increasing house prices and unemployment is to raise interest rates.

“However, interest rates have remained unchanged for two years now, and in my opinion, that's because there is still some local uncertainty within our economy, which may be caused by local involvement in international terrorism,” Ameer said.

Ameer said that due to unrest in the Middle East and Ukraine, the RBA is unsure whether they should raise interest rates since, he believes, they are uncertain what is driving current economic conditions.

Eventually, it could be a global event that forces the RBA to act, Ameer told Property Observer.

Despite the continual presence of ominous global threats, Ameer believes that low interest rates are creating a fantastic environment in which to invest.

“Aside from the obvious benefits, which is low interest repayments for those who have fixed, what many people do not realise is that when the Reserve Bank does increase its interest rates, rent prices usually increase too, and this then creates more cash flow for investors,” he said.

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