RBA holds rates at December meeting

RBA holds rates at December meeting
Joel RobinsonDecember 7, 2020

The Reserve Bank of Australia have kept the official cash rate at a record low 0.75 per cent at its December meeting today.

"There are further signs of a turnaround in established housing markets," Lowe said.

"This is especially so in Sydney and Melbourne, but prices in some other markets have also increased recently.

The RBA are waiting to see if their three cuts in 2019 will stimulate the local economy enough that a further cut isn't required.

NAB however are forecasting disappointing GDP growth of 0.3 per cent in Q3, slowing marginally from the growth rates seen in the last two quarters and a continuation of the weakness seen over the past year.

"NAB's expectation is that the RBA will ease rates by a further 25bp in February, with the risk that it will ease a further 0.25 per cent an announce unconventional policy should a material fiscal stimulus fail to materialise,", NAB advise. 

Two-thirds of Finder RBA's Cash Rate Survey, a survey of economists and experts, also predict a cut to 0.5 per cent in February.

Julie Toth of the Australian Industry Group said in the absence of tax reform, cuts are one of the only moves the RBA can make.

"Australia's economy is failing to accelerate (again) in 2019-20", Toth said.

“Non-mining business investment remains especially weak, but it is sorely needed to boost our productivity growth and real incomes for all.

“In the absence of meaningful tax reform and micro-economic reform, another rate cut probably won't help much, but it is the only response that the RBA can offer," Toth added.

Westpac's Bill Evans says the RBA will cut rates to 0.25 per cent by June 2020.



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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