Following its monthly board meeting, the RBA has come to a decision on the cash rate for November.
The RBA has this month left the official cash rate on hold at 1.5 per cent.
Its decision today is in line with the predictions of the majority of economists in a finder.com.au survey conducted last week.
“Given the solid GDP data and no further weakening in the inflation rate, together with ongoing focus on housing prices, the RBA will sit tight in November,” ING DIRECT’s head of treasury Michael Witts said.
HSBC’s chief economist Paul Bloxham also predicted that the RBA would not move rates this month.
“The inflation targeting regime is flexible and the RBA has already cut by 50bps this year,” Mr Bloxham said.
The decision to keep rates on hold was a “safe bet” on race day, according to CoreLogic’s research director, Tim Lawless.
“The performance of the housing market was likely a key topic of discussion amongst RBA board members, with CoreLogic’s October results released today showing a further 0.5 per cent rise in dwelling values across the capital cities,” Mr Lawless said.
“Since the first rate cut this year in May, CoreLogic’s hedonic index has increased by 4 per cent across the combined capitals, with more substantial rises reported in Sydney and Melbourne. With the cash rate on hold, mortgage rates are likely to remain at the lowest level since the mid-1960s.
“It’s becoming more broadly accepted that such low mortgage rates have contributed to a renewed strengthening in housing market conditions despite lower transactional activity and rising affordability constraints, and policymakers would be reluctant to offer more stimulus to the already hot housing market performance.”
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