RBA Keeps Cash Rate Steady at 1.50 per cent

Despite indications of improvement in the domestic economy, it was no surprise to many in the financial sector that the Reserve Bank announced this week that they would keep the cash rate at 1.50 per cent, a rate that has been unchanged in over a year.

The Reserve Bank Governor, Philip Lowe, stated, ‘Australian economy expanded by 0.8 per cent in the June quarter. This outcome and other recent data are consistent with the Bank’s expectation that growth in the Australian economy will gradually pick up over the coming year.’

He further noted, ‘Employment has continued to grow strongly over recent months. Employment has increased in all states and has been accompanied by a rise in labour force participation. The various forward-looking indicators point to solid growth in employment over the period ahead, although the unemployment rate is expected to decline only gradually over the next couple of years. Wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time. Inflation also remains low and is expected to pick up gradually as the economy strengthens.’

And he concluded by saying, ‘Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.’

What does this mean to the prospective home buyer or investor?

Well, on its own, to be frank, it doesn’t mean anything much at all. Just as the Reserve Bank Board needs to take into account the domestic and global economy, exchange rates, inflation, domestic debt, employment, wages, and various other factors when deciding on interest rates, the prospective buyer or investor also needs to consider a range of factors when deciding on the right loan or investment. To avoid a costly mistake, it is essential that you carefully consider your requirements and take into account all the important aspects of your current situation as well as looking ahead to where you plan to go in the future.

To get the best outcome for you, in your unique circumstances, consult an experienced financial advisor to help you navigate the current financial market and the maze of options available to you in regard to loans, investments and financial products.

Note: this is general information that does not take into consideration the details of your individual situation. Please consult a qualified financial advisor before making decisions about your finances.