Powered by MOMENTUM MEDIA
realestatebusiness logo

Subscribe to our newsletter

RBA rate announcement

The Reserve Bank of Australia has announced the result of its monthly meeting following a period of intense market speculation.

In what was probably a close decision, board members decided to reduce the official cash rate from 2.25 per cent to a new record-low setting of 2 per cent.

According to a finder.com.au survey of 34 economists and commentators, 18 had expected rates to remain on hold, while 16 had expected rates to fall.

Many thought the Reserve Bank would refrain from cutting rates now so it could have more time to assess the impact of the February rate cut.

However, it appears the Reserve Bank decided the sluggish economy needed an immediate stimulus.

Advertisement
Advertisement

Board members probably also wanted to apply downward pressure to the Australian dollar.

This may not be the last rate reduction of the year: six of the 34 survey respondents forecast that the Reserve Bank would make one more cut in 2015.

BT Financial Group chief economist Chris Caton correctly predicted today’s result based on Australia’s fragile economic position.

“There was clearly another cut planned when they cut in February and not enough has happened to change that plan,” he told finder.com.au.

ME Bank’s general manager of markets, John Caelli, also predicted today’s result because of “low inflation, reasonably high unemployment and below-trend economic growth”.

Onthehouse finance editor Peter Boehm was another to forecast today’s rate cut, despite the risk it would further inflate high property prices in Sydney and Melbourne.

“Consumer and business confidence [are] still low,” Mr Boehm said. “Putting more cash in the hands of households through lower mortgage payments can help increase consumer spending and thereby increase business confidence.”

 

RBA rate announcement
mortgagebusiness

Latest News

Discover some of the top news stories impacting the mortgages space in this weekly wrap-up. ...

The financial watchdogs have remained wary of risks to the housing market as cash rate rises flow through to mortgage customers. ...

Australia’s household wealth has reached $14.9 trillion largely due to house price momentum, yet quarterly growth has continued its recent...

VIEW ALL

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!

What is the maximum proportion of income borrowers should use to service a mortgage?

Website Notifications

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