The Reserve Bank of Australia has left the official cash rate on hold at 1.5 per cent in its February 2017 Board meeting.
Coming to little surprise, the announcement of the cash rate hold mirrors the result from the last RBA Board meeting in December 2016. The last cut made was in August 2016.
In a statement by governor Phillip Lowe, Australia’s post-mining investment boom period and a weaker than expected September quarter were listed attributing factors to the decision.
“The Bank’s central scenario remains for economic growth to be around 3 per cent over the next couple of years.” Dr Lowe said.
“Growth will be boosted by further increases in resource exports and by the period of declining mining investment coming to an end. Consumption growth is expected to pick up from recent outcomes, but to remain moderate.”
Unemployment rates were also linked to the cash rate hold. Rates are at an 11-month high of 5.8 per cent due to the number of people looking for work rather than job losses.
“The forward-looking indicators point to continued expansion in employment over the period ahead,” Dr Lowe concluded.
Inflation also remains quite low, with an expected December quarter outcome. Headline and underlying inflation sat at around 1.5 per cent.
“The continuing subdued growth in labour costs means that inflation is expected to remain low for some time,” noted Dr Lowe.
Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent, with the rise in underlying inflation expected to be a bit more gradual.
The variability of the housing market across Australia was also noted as a contributing factor, with conditions and prices strengthening in some areas and declining in others.
“Growth in rents is the slowest for a couple of decades. Borrowing for housing has picked up a little, with stronger demand by investors,” Dr Lowe said.
Despite the cash rate hold, banks continue to lift home loan rates. A new RateCity.com.au study shows 33 lenders – including two major banks, ANZ and NAB, – have lifted some of their popular home loan rates in recent weeks. A total of 382 home loan rates, including 265 fixed and 117 variable products, have been hiked since January 1.
Refinancers can choose from a range of low rate home loans currently on the market.
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