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RBA rate announcement

RBA rate announcement

The Reserve Bank of Australia has announced the result of its monthly board meeting.

The official cash rate has been left at a record-low 2.5 per cent for the 16th consecutive month, as most economists had predicted.

CoreLogic RP Data research analyst Cameron Kusher said that with home value growth continuing to moderate in November and dwelling and work approvals recently slipping, there may be some concern that the housing market alone is not providing enough economic stimulus as mining and resources investment activity subsides and commodity prices fall.

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“Nevertheless, the RBA has again kept official interest rates on hold this month,” Mr Kusher said.

All 37 economists surveyed by comparison website finder.com.au, including those of the big four banks, expected the RBA to keep the cash rate on hold today.

Three of the 37 panellists are forecasting the cash rate to drop further next year, including Andrew Wilson (Domain Group), Stephen Koukoulas (Market Economics) and David Scutt (Scutt Partners).

The remaining 34 experts are forecasting the next cash rate movement will be an increase.

Regardless of the direction, a vast majority of experts are expecting the cash rate to move next year, with just two forecasting the next move to be in 2016 – James Bond (Financial Services Council) and Noel Whittaker (QUT Business School).

Michelle Hutchison, money expert at finder.com.au, said the survey showed that wider economic pressures were impacting the cash rate predictions.

“Of the 37 experts, many raised several key issues that influenced their predictions, including the need for stability, a slow economy, a weakening Australian dollar and no unexpected movements in the past month,” Ms Hutchinson said.

“It was also interesting to find some experts in the survey discussing the reality of a rate cut next year, with factors that could occur such as a falling housing market and slower growth in China and other foreign economies.

“There is a definite shift in the direction that the cash rate could take, with last month’s survey results showing all 33 experts were forecasting the cash rate to rise next year, including one expert (Andrew Wilson, Domain Group) predicting a rate cut before an upward cycle begins," she said.

“But now there are three experts on the panel who are betting on a rate cut and others citing a possibility of a drop.”

Despite most of the experts betting the cash rate will rise next year, 69 percent believe property prices will continue to climb.

RBA rate announcement
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