Despite the recent spike in the Australian dollar, industry figures have labelled the Reserve Bank’s April cash rate decision as unsurprising.
The RBA announced yesterday it would leave the official cash rate at the record low 2 per cent, irrespective of recent concern surrounding the rising Australian dollar.
LJ Hooker chief executive Grant Harrod said the move was expected, with the RBA likely to see the strengthening currency as a short-term fluctuation rather than a need to cut interest rates.
A “stable start” to the autumn property market has also given little reason for the RBA to reduce or hike the cash rate, with buyers and investors remaining active, according to Mr Harrod.
“The east coast is holding up and we are not seeing any significant change in Melbourne, Sydney and Brisbane where listings remain tight,” he said.
“Good properties in highly sought after areas are selling well above their reserve or anticipated price, even though there is some indication the number of buyers may be lessening.”
Housing Industry Association economist Diwa Hopkins was also unsurprised by the RBA’s decision to leave the cash rate unchanged.
“The latest read of the economy shown by ABS national accounts data beat most expectations, with especially encouraging results found within the household sector,” Ms Hopkins said.
“Residential construction activity – both new home building and renovations investment – made substantial contributions to the 3 per cent overall annual growth in GPD at the end of 2015.
“Inflationary pressures remain fairly subdued, with the renewed strength of the Australian dollar likely to ensure that this remains the case. However, [yesterday’s] RBA statement identified the appreciation of the dollar as a potential impediment to the adjustment in the economy.”
The Reserve Bank has left the official cash rate at 2 per cent since May 2015.
[Related: Federal budget to delay rate cut: HSBC]