Save
Reserve Bank holds the cash rate steady
The Reserve Bank of Australia has decided to keep the cash rate steady at its latest monthly meeting, but economists’ views on when we’ll see a change are starting to differ.
Reserve Bank holds the cash rate steady
The Reserve Bank of Australia has decided to keep the cash rate steady at its latest monthly meeting, but economists’ views on when we’ll see a change are starting to differ.
The board of the Reserve Bank of Australia (RBA) announced it would hold the cash rate at 1.5 per cent this month, marking the 13th consecutive month without a change.
This decision was widely expected, with future markets pricing in a 0 per cent chance of a change from as early out as 24 August.
Shane Oliver, AMP Capital’s chief economist, said that while economic conditions and Australian growth are both improving, a lack of wages growth (both globally and domestically) paired with high debt levels is counteracting these positive forces.
“Overall, the RBA’s bias on interest rates for now remains pretty neutral. Reflecting this and the RBA’s continued mild attempt at jawboning against a further gain in the Australian dollar is little changed from where it was before today’s RBA announcement,” he said.
“We remain of the view that the RBA will leave rates on hold at 1.5 per cent out to late next year at least.”
However, not everyone in the market shares Mr Oliver’s view that rates will stay at their current level for quite so long.
Paul Bloxham, HSBC’s chief economist, said prior to the RBA decision that while it makes sense to keep interest rates on hold this month, that there remains “a strong case for it needing to be lifted in the next six months”.
“The case for a higher cash rate is building and, on my assessment, it should be lifted within the next six months. Global growth is lifting, which is supporting commodity prices and boosting Australia’s national income,” he said.
“Surveyed business conditions are around decade-highs, corporate profitability has picked up and so has jobs growth. Although underlying inflation is still below the bottom edge of the target band, the lift in growth should be expected to support a pick-up in underlying inflation over time and monetary policy should be set with the forecasts in mind.”
Mr Bloxham said the current cash rate level was set with the intention of rebalancing the Australian economy following the end of the mining boom, a goal which has been almost fully realised.
In fact, Mr Bloxham said that not only has the low cash rate already achieved its purpose, but that it is now causing problems for the economy by “continuing to support housing price booms in Sydney and Melbourne.”
Savings account
Afterpay launches Money app, bank accounts and retroactive BNPL
Afterpay is upgrading its app-based arsenal. ...Read more
Savings account
2020 saw the fastest increase in bank deposits since the GFC
Bank deposits of Australian households increased by more than 12 per cent last year. ...Read more
Savings account
Australians are putting savings goals ahead of holiday plans
While travel restrictions are soon set to ease, Australians are still putting their savings goals first. ...Read more
Savings account
More than half of Aussie Millennials don’t have a savings plan
Money is remaining a taboo subject for Millennials, which is leading to poor saving habits, a big four bank has revealed. ...Read more
Savings account
COVID-19 sees Aussies reach record-high wealth
New stats have revealed that Aussies are now richer than ever, having stashed away their cash during a year marred by the COVID-19 pandemic and the resulting economic shutdown. ...Read more
Savings account
Saving more during the pandemic? Here’s where that money should go
If you’re finding that you’re saving more during the pandemic, you’re not alone. ...Read more
Savings account
Aussie savings goals put on hold due to COVID-19 pandemic
The COVID-19 pandemic has seen Australians being forced to dip into their life savings, which is impacting their ability to achieve financial goals, new research has found. ...Read more
Savings account
The 4 types of COVID-19 consumers: Which one are you?
Australians are still living in fear of worsening economic conditions, with a study revealing changed spending behaviours across the board despite varying levels of individual financial impact. ...Read more
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
How the post-lockdown period will influence property, what the soaring NFT market means, and defining financial wellness
Listen now
Savings account
Afterpay launches Money app, bank accounts and retroactive BNPL
Afterpay is upgrading its app-based arsenal. ...Read more
Savings account
2020 saw the fastest increase in bank deposits since the GFC
Bank deposits of Australian households increased by more than 12 per cent last year. ...Read more
Savings account
Australians are putting savings goals ahead of holiday plans
While travel restrictions are soon set to ease, Australians are still putting their savings goals first. ...Read more
Savings account
More than half of Aussie Millennials don’t have a savings plan
Money is remaining a taboo subject for Millennials, which is leading to poor saving habits, a big four bank has revealed. ...Read more
Savings account
COVID-19 sees Aussies reach record-high wealth
New stats have revealed that Aussies are now richer than ever, having stashed away their cash during a year marred by the COVID-19 pandemic and the resulting economic shutdown. ...Read more
Savings account
Saving more during the pandemic? Here’s where that money should go
If you’re finding that you’re saving more during the pandemic, you’re not alone. ...Read more
Savings account
Aussie savings goals put on hold due to COVID-19 pandemic
The COVID-19 pandemic has seen Australians being forced to dip into their life savings, which is impacting their ability to achieve financial goals, new research has found. ...Read more
Savings account
The 4 types of COVID-19 consumers: Which one are you?
Australians are still living in fear of worsening economic conditions, with a study revealing changed spending behaviours across the board despite varying levels of individual financial impact. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
