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Restrained investment and soft labour demand show a continuing need for a low official cash rate, according to 1300HomeLoan managing director John Kolenda.
Mr Kolenda urged the Reserve Bank (RBA) to resist lifting rates on the back of an improving real estate market, citing continued concerns around the broader economy.
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“With the mining sector slowing, unemployment rising and the retail sector waiting to see improvement, we know that the RBA has to tread carefully,” he said.
In minutes from its September board meeting released this week, the Reserve Bank said the housing market continued to improve in response to low rates, while mining investment and the unemployment rate remained areas of ongoing concern.
“Mining investment was expected to decline over the course of the next few years,” the minutes read.
“The unemployment rate has continued to drift higher over the past year and indicators of labour demand remained soft”.
While the RBA board suggests business investment will remain restrained in the short term, Mr Kolenda said the recent change in government has already improved business confidence.
“It is pleasing to see the election out of the way and a surge in business confidence,” he said.
“But we need to see real improvements in investment and employment and we have a long way to go before we are out of the woods.”
The RBA minutes gave no indication that a rate rise was imminent, showing instead a slight easing bias.
“Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them,” the minutes said.
