RBA announces cash rate decision
The Reserve Bank of Australia has announced its decision on the official cash rate for December after it concluded its monthly board meeting.
For the sixteenth consecutive month, the RBA has decided to keep the official cash rate at the record low of 1.50 per cent.
The cash rate last moved in August 2016, when it dropped to the current rate.
CoreLogic head of research Tim Lawless said the slowing house market continued to ease concerns about the need to cut the cash rate, while inflation remains below the RBA’s target range, resisting calls for an increase in the cash rate.
“The latest round of macroprudential policies resulting in tighter credit policies continues to make lending conditions tougher, particularly for investors,” said Mr Lawless.
“The implementation of these new measures appears to have coincided with the slowdown in housing market conditions, particularly in Sydney where investors have been most active over recent years.
“High levels of household debt along with stretched housing affordability and an apparent slowdown in retail spending from our perspective suggests that any increases to the cash rate remain some way off.”
AMP chief economist Shane Oliver said strong business conditions and a high Australian dollar argued against a rate hike.
“Strong business conditions, strong employment and the RBA's own expectations for stronger growth point to an eventual rate hike but low inflation, record low wages growth, the slowing housing cycle, uncertainty around consumer spending and the still too high Australian dollar argue for flat or even lower rates,” said Mr Oliver.
ABC Bullion chief economist Jordan Eliseo said he was confident there would be a rate cut on the horizon but believed the rate would hold going into the festive season.
“The RBA will be happy to sit tight as we approach Christmas, and monitor incoming data,” said Mr Eliseo.
“With housing starting to roll over, retailers facing a tough holiday period, and a stubbornly high Australian dollar, we remain confident that the next move will be a cut, but this will take time to play out.”