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RBA rate announcement

The Reserve Bank of Australia has made its cash rate decision, following a month of intense speculation.

The official cash rate has been left at a record-low 2.25 per cent for a second consecutive month, as most experts had predicted.

According to a finder.com.au survey of 42 economists and commentators, 32 had forecast the Reserve Bank board would leave rates on hold, while 10 had forecast a cut.

St George senior economist Janu Chan said ahead of today’s announcement that not enough had changed since the March board meeting to justify a cut.

“The Reserve Bank currently holds an easing bias, but looks to be waiting to assess developments,” she told finder.com.au.

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Market Economics managing director Stephen Koukoulas said a rate cut was coming, but that April was too soon.

“The Reserve Bank has a stubborn attitude when it comes to house prices and it seems to be downplaying the risks coming from weak domestic growth and high unemployment,” he said.

BetaShares chief economist David Bassanese said the Reserve Bank would have been thinking of Sydney’s surging property prices when it decided against cutting rates today.

“Clearance rates are high, house prices still going very strongly and they’re obviously concerned about that,” he said.

However, it appears that another rate cut could be just around the corner: 31 of the 42 survey respondents expect a cut by June and 40 expect a cut by September.

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Macquarie Group senior economist James McIntyre said there was a good chance the cut would happen as early as May if the Australian dollar pushes beyond US$0.78.

Moody's Analytics economist Katrina Ell forecast that the Reserve Bank would lower the cash rate to 1.75 per cent some time in 2015.

“The Reserve Bank is probably waiting for Q1 Consumer Price Index data released in May before it cuts rates again,” she said.

 

RBA rate announcement
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