The Reserve Bank has announced its cash rate decision following its monthly board meeting.
In a move that was widely predicted, the RBA decided to maintain the current official cash rate at its record low of 1.50 per cent. The cash rate last moved in August 2016, to its current record-low level.
Leading up to today’s meeting, all 33 experts in a finder.com.au survey predicted a hold verdict, while 90.23 per cent of brokers surveyed by HashChing also tipped that the RBA would keep the official cash rate on hold.
Mortgage Choice CEO John Flavell commented that the decision was “no surprise”, adding that the decision was simply a case of “another month, another unsurprising cash rate decision from the Reserve Bank of Australia”.
He added that consumer sentiment remains robust, confidence remains high by historical standards and unemployment is falling.
“When you combine all of these factors, it is little wonder why the Reserve Bank choose to leave the official cash rate on hold for another month,” Mr Flavell concluded.
Speaking to The Adviser before the RBA’s announcement, Digital Finance Analysis principal, Martin North said he would be “extremely surprised” if rates were cut. Mr North said any future move outside of a hold would most likely be up, “unless there’s a really big external shock.”
Baillieu Holst’s Darryl Gobbett also predicted that there would be no change to the official cash rate this month.
“The RBA will still be concerned about systemic stability being possibly adversely impacted by increased debt if rates were cut while likely seeing little benefit to increased growth,” Mr Gobbett said.
Reflecting the industry consensus, head of investment strategy and chief economist at AMP Capital, Shane Oliver also anticipated a hold decision.
“Not enough has changed since the last meeting, which saw the Reserve Bank get more optimistic about growth and inflation, and the fact that it’s too early to declare victory concerning the Sydney and Melbourne housing market will lead to a situation where they’ll leave rates on hold,” Mr Oliver said.
Meanwhile, CoreLogic’s head of research Tim Lawless predicted a hold verdict, but said a cut was possible in the future.
Mr Lawless pointed to signs of a slowdown in the Sydney and Melbourne housing markets and “softer housing conditions” as factors lending “further support to the notion that house price growth has moved through its cyclical peak”.
He said that this may “take some pressure away from the RBA to keep rates steady, especially given that other sectors of the economy other than housing seemingly need interest rates set at a lower level to what they currently are”.
However, Mr Lawless’ hypothesis lies in contrast to the majority of the experts in the finder.com.au survey. Twenty-four out of 30 experts predicted the next cash rate move would be a rise.
Most respondents believe the rise will occur in 2018, but four respondents said they could see a rate rise taking place between October and December this year.
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