RBA holds interest rate at record low 0.1 per cent, purchases extra $100 billion of bonds
At its first meeting in 2021, the RBA have kept the interest rates at record 0.10 per cent.
They also announced an extra $100 billion of bonds. Westpac had said it was possible the RBA would extend, but expected them to wait until March.
CreditorWatch chief economist Harley Dale says the RBA used up its ammunition late in 2020 and the focus this year will be firmly on federal and state fiscal policy to complement super-low borrowing rates and keep the Australian economic recovery on track.
"In terms of all the policies that the RBA has in place, the Central Bank will be closely keeping an eye on early 2021 economic updates for key sectors such as retail," Dale said, adding that unemployment numbers, a key metric for the RBA, had been stronger than forecasted.
Every expert and economist surveyed in Finder's RBA Cash Rate Survey predicted the cash rate would hold, but a record number expressed positive sentiment about employment.
Positive sentiment around employment dropped to zero in April when the lockdowns first began, but the recent unemployment figures and recovery has seen 73 per cent suggest employment is positive, a record number since Finder started collecting the data in March 2018.
Graham Cooke, head of consumer research at Finder, said the swing in positivity around employment is significant.
“There was a lot of fear during the first three quarters of 2020 that certain sectors within the jobs market would not survive without government support.
“It now looks like experts are fairly confident that the market is robust enough to ride out COVID-19.
“Affordable housing, however, may be quickly evaporating, with house prices on-track to increase this year in every capital city,” he said.
Record house prices have led to a 12-month low in sentiment about housing affordability.
Only 10% of experts are optimistic, down from a high of 62% in September 2020.
“A combination of record low interest rates, reduced supply, government stimulus and bolstered savings has pushed sale prices north and climbing.
“Potential buyers who have been sitting on the fence should act sooner rather than later based on these results,” Cooke said.