05 September 2016

Reserve Bank Interest Rate Announcement Sep 2016

The Reserve Bank of Australia announced today that the cash rate will be kept on hold at 1.50 per cent as many economists had predicted.

Real Estate expert and Rapid Realty Australia Principal, Aaron McLeod commented; "the RBAs decision is positive news for property investors and owner occupiers but regional markets were hoping for further stimulation with a rate cut".

Soft inflation data and a stubborn Australian dollar is the main reason the RBA chose to leave interest rates where they are as they wait and see what happens with the broader economy.

As the RBA likes to link its cash rate decisions to the quarterly Consumer Price Index (CPI) releases, the next rate decision is not expected until October. Even then many industry experts are predicting a steady as she goes approach or even a further drop in the cash rate before Christmas.

Corelogic Head of Research, Tim Lawless suggested that a November cut is likely particularly if inflation remains low. "If inflation was say 1.0 per cent year-on-year, that's a pretty good reason for another rate cut, he told The Adviser.

Although, the RBA had tried to engineer a further rate cut in the hope of reducing the Aussie dollar further to improve the country's balance of trading accounts.

The RBA seemingly are treading on egg shells trying to stimulate the economy yet be uneasy about firing up the housing market.

In the capital cities such as Melbourne and Sydney, lower rates could over cook these markets. While Brisbane, Perth, Darwin and regional areas like North Queensland, could benefit from a further cash rate cut.

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