RBA announces cash rate decision
With interest rates still at record lows, The Reserve Bank of Australia has announced the result of its second board meeting for the year.
As widely predicted, the Reserve Bank has kept the official cash rate on hold at two per cent.
Out of the 31 economists and commentators surveyed by comparison website finder.com.au only one had predicted otherwise, with the rest predicting that rates would remain on hold.
AMP Capital’s chief economist Shane Oliver said recent Reserve Bank commentary suggests a degree of comfort with the current level of the cash rate and, while it retains an easing bias, not enough has changed to suggest it is about to act on it.
“It’s basically in wait-and-see mode regarding the jobs market and the potential impact of global financial turmoil,” said Mr Oliver.
BIS Shrapnel associate director of economics Richard Robinson, who also predicted rates would remain on hold, said although economic growth is below trend, it is still holding, with enough positives to outweigh the negatives.
“Confidence rebounded in February, so consumers are not panicking, and households will continue to spend, albeit with modest growth,” said Mr Robinson.
Forty-five per cent of experts surveyed by finder.com.au believe Australia is at the bottom of the interest rate cycle, while 26 per cent are forecasting one further rate cut to 1.75 per cent.
“The Reserve Bank remains open to the possibility of reducing interest rates, but is only likely to do so should the economic situation internationally deteriorate further,” Housing Industry Association senior economist Shane Garrett said.
Twenty-three per cent of those surveyed believe a rate rise is on the cards in 2016, while 48 per cent say it won’t happen until next year.