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Reserve Bank makes call on interest rates

by Reporter4 minute read
Reserve Bank of Australia

The Reserve Bank of Australia has made its final interest rate decision of the year at its monthly board meeting.

The board confirmed most people’s expectations by leaving the official cash rate at a record-low setting of 2 per cent, where it has been since May.

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All 33 economists and commentators surveyed by comparison website finder.com.au correctly predicted today’s result.

At various times this year, there has been talk that the RBA might either cut rates to stimulate the economy or increase rates to cool the Sydney and Melbourne property markets.

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However, with the economy growing slightly stronger and the nation’s two biggest housing markets slowing down, those two concerns appear to have cancelled each other out.

CommSec economist Savanth Sebastian told finder.com.au that the RBA is comfortable with how the economy is evolving and so is in ‘wait-and-see’ mode.

Domain Group senior economist Andrew Wilson said the RBA wanted to hold off until the next US rate decision, which will occur on 16 December.

After today’s decision, speculation will begin about what the RBA will do at its next board meeting in February.

Most of the 33 survey respondents expect rates to remain on hold again, although five forecast that the board would cut rates.

Market Economics managing director Stephen Koukoulas said rates don’t need to be lowered further given that the rate cuts in February and May have now helped lift the economy.

"The economy is ending 2015 on a more positive note, and while conditions globally are fragile, the prospects for the Australian economy to register 3 per cent real GDP growth seem strong,” he said.

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