Invest
RBA hands down rate decision
The Reserve Bank of Australia has delivered the official cash rate for June following its monthly board meeting.
RBA hands down rate decision
The Reserve Bank of Australia has delivered the official cash rate for June following its monthly board meeting.
The RBA board has again decided to keep the cash rate at a record low of 1.5 per cent, in a move predicted by most industry pundits.
None of the surveyed respondents on finder.com.au’s panel of industry pundits predicted a rate change, despite some economic indicators showing signs of a slowdown.
The decision once again breaks the record for the longest period of time in Australian history that the cash rate has remained at the same level.
In April of this year, the RBA broke the former record of 17 consecutive meetings of unchanged interest rates (set in 1995–1996) when it kept the cash rate on hold for the 18th time.
The June decision continues the record-breaking run, as Australia’s official cash rate has now been 1.50 per cent for the 20th consecutive time (or 22nd consecutive month, seeing as there is no cash rate announcement in January).
Economist at AMP Capital Shane Oliver said, “Basically nothing has changed. Signs of stronger investment, booming infrastructure spending, strong export volumes and the RBA’s own forecasts argue against a cut.
“Uncertainty around consumer spending, the slowing Sydney and Melbourne property markets, tightening bank lending standards and the slowing Sydney and Melbourne property markets argue against a hike, so no case to move.”
Mortgage Choice head of corporate affairs Jacqueline Dearle echoed Mr Oliver’s sentiment, saying, “The RBA’s decision to hold would be consistent with sustainable growth in the economy, home loan demand remaining stable and achieving the inflation target over time.”
Capital Economics’ Paul Dales claimed that the central bank’s determination was influenced by the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
“Economic conditions are not strong enough to warrant higher rates and the RBA is becoming concerned that the banking royal commission will result in some households and businesses finding it harder to get credit. The RBA won’t want to raise the price of credit at the same time,” Mr Dales said.
LJ Hooker head of research Mathew Tiller also noted that economic conditions argued against a rate change, but he believes the RBA would be pleased with recent housing market trends.
“There has been no material change in indicators since last month. Property price growth continues to moderate, which will be welcomed by the RBA. Investor demand has eased, with owner-occupiers and first home buyers coming back into the market to fill the gap,” Mr Tiller said.
However, despite also predicting a hold verdict, managing director of Market Economics Stephen Koukoulas said he believes the central bank should cut rates.
“It remains the case that the RBA is downplaying the news of falling house prices, rising unemployment rate, weak wages and inflation. It should cut rates but it won’t,” Mr Koukoulas said.
Further, managing director of 1300 Home Loan John Kolenda claimed that borrowers should expect out-of-cycle interest rate hikes from banks, irrespective of the official cash rate decision.
“These increases are already starting to flow through and we could see upward rate movements of more than 20 basis points,” Mr Kolenda said.
“If the lending environment wasn’t complicated enough, the spotlight on the banks from the Hayne royal commission into the financial services sector is making home finance more difficult, particularly through tighter controls on customer living expenses, which has resulted in borrowing capacity for consumers dropping by 10-30 per cent over the past quarter.”
RELATED ARTICLES
Spending
Moneysmart study reveals Gen Z women more concerned about finances than men
A new research conducted by ASIC’s Moneysmart has unveiled the heightened levels of stress and concern regarding finances and the cost of living among Australian Gen Z women compared to their male ...Read more
Spending
The cost of politeness: Aussies out of pocket by $1,350 due to 'awkward tax'
It's the time of year when Australians dive into their pockets for festive events and gatherings, yet a recent study by PayPal suggests that many are too polite, or perhaps too embarrassed, to ask for ...Read more
Spending
Aussies can ‘NAB Now Pay Later’ with the last major bank to embrace BNPL
NAB has become the latest bank to enter the BNPL market. Read more
Spending
Aussie households spent $368 a week on transport after petrol price surge
Fuel costs have increased by 40 per cent over the past year, a new report from the Australian Automobile Association has revealed. Read more
Spending
Voters say reducing the cost of living should be the government’s top priority
Aussies have ranked high cost of living as the top issue that needs to be addressed by the next government. Read more
Spending
Bodies back Labor’s commitment to stronger BNPL regulation
All parties should commit to stronger regulations for the BNPL sector, according to Financial Counselling Australia. Read more
Spending
Household spending surges led by retail and recreation
Spending on retail, recreation and hospitality have continued to climb as COVID-19 case numbers and restrictions have eased. Read more
Spending
Banks extend financial assistance to flood-affected customers
A range of assistance is available from major banks to those impacted by flooding in NSW and Queensland. Read more
Spending
Moneysmart study reveals Gen Z women more concerned about finances than men
A new research conducted by ASIC’s Moneysmart has unveiled the heightened levels of stress and concern regarding finances and the cost of living among Australian Gen Z women compared to their male ...Read more
Spending
The cost of politeness: Aussies out of pocket by $1,350 due to 'awkward tax'
It's the time of year when Australians dive into their pockets for festive events and gatherings, yet a recent study by PayPal suggests that many are too polite, or perhaps too embarrassed, to ask for ...Read more
Spending
Aussies can ‘NAB Now Pay Later’ with the last major bank to embrace BNPL
NAB has become the latest bank to enter the BNPL market. Read more
Spending
Aussie households spent $368 a week on transport after petrol price surge
Fuel costs have increased by 40 per cent over the past year, a new report from the Australian Automobile Association has revealed. Read more
Spending
Voters say reducing the cost of living should be the government’s top priority
Aussies have ranked high cost of living as the top issue that needs to be addressed by the next government. Read more
Spending
Bodies back Labor’s commitment to stronger BNPL regulation
All parties should commit to stronger regulations for the BNPL sector, according to Financial Counselling Australia. Read more
Spending
Household spending surges led by retail and recreation
Spending on retail, recreation and hospitality have continued to climb as COVID-19 case numbers and restrictions have eased. Read more
Spending
Banks extend financial assistance to flood-affected customers
A range of assistance is available from major banks to those impacted by flooding in NSW and Queensland. Read more
