subscribe to our newsletter

RBA makes cash rate call

The Reserve Bank of Australia has revealed the decision of today’s monthly board meeting.

In a widely-anticipated move, the RBA decided to keep the official cash rate on hold at its record low of 1.50 per cent, which it has been since August last year.

Prior to the RBA’s meeting on Tuesday, 37 of the 38 experts and economists from the finder.com.au RBA survey accurately tipped the cash rate would remain unchanged today.

Liberty general manager of risk Lynne Jordan said current household debt levels, low-wage growth, active property investors and a weak inflationary environment still present major policy challenges for the RBA.

“I don’t think we’ll know exactly when the RBA’s next move will be until CPI data comes out at the end of April. If Inflation has gone up, we lean closer towards the rate increase many economists have predicted,” Ms Jordan said.


“But if it is the same or lower, the RBA will likely hold the cash rate and remain in the same predicament it has been for the past few months – that investors will continue to make the most of low interest rates and drive up prices, which could result in household debt levels increasing even further.”

When asked about recent out-of-cycle rate hikes, most of the experts (69 per cent) said they believe these increases will allow the Reserve Bank to hold off for longer before adjusting the cash rate.

“While recent independent rate rises have been unpopular with home owners, it’s likely the banks have given the RBA breathing space to hold out longer before making a move,” finder.com.au insights manager Graham Cooke said.

“We’re expecting the reserve Bank to stay in its ‘wait and see’ mode for the foreseeable future.”

CoreLogic head of research Tim Lawless said the combination of higher mortgage rates, as well as firmer policy settings from APRA around investment lending and more scrutiny from ASIC on lending behaviour are likely to “take some heat out” of investment demand.


“Additionally, market-driven factors including high apartment supply, record low rental yields and affordability constraints should gradually contribute to slower housing market conditions,” Mr Lawless said.

“If the housing market continues to accelerate despite these combined factors, there is a very high likelihood of further policy announcements that will more firmly muffle investment demand.”

Matthew Peter, chief economist at QIC, expects the “hot state” of the housing market will keep the RBA from cutting rates, while the “tepid” recovery in the economy and lack of wage growth and core inflation will keep it from raising rates.

“RBA on hold through 2017 and the first half of 2018,” he predicted.

RBA makes cash rate call

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Latest News

A high rate of loan repayments through the pandemic has somewhat slowed the growth of Heritage Bank’s book, despite a surge in approvals. ...

Small and medium-sized enterprises were the most commonly targeted victims of cyber attacks in the last financial year, according to new rep...

An overwhelming majority of Pulse Credit Union members have supported the proposed deal with Teachers Mutual Bank Ltd, with the two companie...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.