Cash rate to remain steady: RateCity

Staff Reporter Tuesday, 02 February 2016 Comments 0
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The Reserve Bank of Australia is tipped to leave the official cash rate on hold at today’s monthly board meeting.

According to RateCity’s analysis of 23 economic indicators, unexpected lifts in pockets of the domestic economy will counteract any urge the RBA might have to cut rates in response to international factors.

RateCity money editor Sally Tindall said that while the case for another rate cut in future months is still mounting, the RBA would almost certainly keep up its ‘wait and see’ approach this month.

“Unemployment figures have been consistently steady or dropping since July of last year, while inflation has risen slightly in the January quarter,” she said.

“While this is still below the RBA’s target band, these inflation figures won’t mean Glenn Stevens has to hit the panic button just yet.”

The comparison website said the housing sector has also provided the RBA with some much-needed relief this month, noting that house prices in Sydney and Melbourne have cooled significantly, while increases to investor mortgage rates have put an abrupt halt to the “seemingly unstoppable” growth that dominated 2014 and the first half of 2015.

“Both of these factors will provide the RBA with room to implement a cut in future months, without fear of creating another property bubble,” Ms Tindall said.

[Related: Mortgage rates fall across all categories]

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