Australia set for cash rate record

At 2pm today, the RBA will release its decision on the official cash rate. 

If the bank meets expectations and decides not to change the rate, it will be 18 months since the money market interest rate moved — the longest period of time in which the Australian cash rate has not moved. 

The cash rate last moved in August 2016, when it dropped to its record low of 1.5 per cent. 

According to RateCity, the previous record of 17 meetings with no change was set 22 years ago, between February 1995 and July 1996.

The cash rate back then was 7.50 per cent. 

RateCity’s spokesperson, Sally Tindall, said that the RBA board was set to blow the old record out of the water.

“The record might be set, but the end isn’t near. The Australian economy is stuck in neutral and Governor Philip Lowe’s hands are tied.

“The stalling of the long-awaited company tax cut is the latest thorn in the RBA’s side. The government’s claim that the tax cut will result in better paid jobs, one of the key drivers for a rate rise, won’t materialise until after May, if at all.

“Eighteen meetings with the cash rate unchanged will be one for next week’s history books. Eighteen meetings with the cash rate unchanged at record lows is one for Australian home owners.” 

Ms Tindall continued: “While cost of living pressures, including escalating house prices, have squeezed the family budgets in recent years, many families have found a silver lining in interest rates. 

“What home owners shouldn’t lose sight of are long-term trends. History tells us rates will rise, which means now is the best time to start knocking off extra debt, to give yourself a buffer when the tide does eventually turn.”

[Related: RBA flags potential ‘financial stress’ threat for next five years]