No surprises, cash rate still on hold

October 03, 2017

The Reserve Bank of Australia has once again decided to keep the official cash rate on hold at 1.5%.

Mortgage Choice chief executive officer John Flavell said he was not surprised by the Board's decision to leave the cash rate untouched for the 14th consecutive month.

“In the minutes of its September Board meeting, the Reserve Bank said keeping the monetary policy unchanged would be consistent with achieving sustainable growth in the economy and its inflation target over time,” he said.

Mr Flavell said in making their decision, the Board had to take into consideration a number of global and domestic economic factors.

“On the domestic front, the economy is tracking well, with positive business conditions, improved consumer confidence and a relatively low unemployment rate,” he said.

“According to the latest data from the Australian Bureau of Statistics, the unemployment rate continues to hover around 5.6%, which is low by historical standards.

“In addition to the strong employment data, the latest National Australia Bank Business Survey found conditions are at their highest level since early 2008.

“Meanwhile, data from the Westpac Melbourne Institute of Consumer Sentiment found confidence rose 2.5% in September buoyed by improved economic conditions.

“At a global level things are tracking along well. In the US, the Federal Reserve left the official cash rate on hold, citing a strengthening labour market and moderate growth in economic activity as the basis for their decision.

“For all of these reasons and more, it is easy to see why the Reserve Bank of Australia decided to keep the cash rate on hold for another month.”

Looking ahead, Mr Flavell said he would not be surprised to see the Reserve Bank leave the cash rate on hold for a little while longer.

“I think we will continue to enjoy a period of cash rate stability over the coming months,” he said.

But while the cash rate remains stable, there has been plenty of movement in home loan interest rates over the last couple of weeks.

“We have seen a lot of lenders tweak their policy and pricing on their investor and owner-occupier loans in recent weeks.

“It is a complex market so it is important for buyers and borrowers to speak to a local mortgage professional who can make sure they have the right solution for their needs.”