RBA keeps monetary policy on hold

September 01, 2020

The Reserve Bank of Australia (RBA) has today made the decision to keep the nation’s official cash rate on hold at 0.25% at its September monetary policy meeting.

Speaking about the RBA’s decision, Mortgage Choice CEO Susan Mitchell said, “Today’s decision was expected from the RBA Board given the latest economic data and uncertainty over Australia’s economic recovery."

“High unemployment and persistently low inflation sitting well below the Board’s target range will keep the cash rate stagnant for the foreseeable future.” 

“In a speech delivered by RBA Governor Lowe to the House of Representatives Standing Committee on Economics, Lowe reiterated that the cash rate will remain at the current level for some years and highlighted the important role fiscal policy is playing in supporting the Australian economy."

“The latest data from the Australian Bureau of Statistics reveals the devastating impact the Coronavirus pandemic continues to have on the labour market. The number of unemployed Australians grew over the month of July, bringing the seasonally adjusted unemployment rate to 7.5%. Given the data was recorded prior to Melbourne moving to Stage 4 restrictions in August and fiscal support to JobKeeper is set to reduce in September, high unemployment is likely to persist for some time yet."

“Uncertainty over the economic outlook continues to weigh on consumer sentiment. The latest Westpac Melbourne Institute of Consumer Sentiment revealed that sentiment fell further in August to near the extreme low seen in April, in response to the Stage 4 lockdown in Melbourne and new cases in New South Wales.” 

“The latest economic data creates many headwinds for the nation’s property market. Data from CoreLogic revealed that Australian housing values recorded a fourth month of decline, down 0.4% in August. Regional markets have proven more resilient, bucking the trend with dwelling values remaining flat over the month. Pleasingly, the rate of decline has eased over the past two months with five of the eight capitals recording steady or rising values throughout the month."

“As we enter what will be an unusual Spring selling season, opportunities remain for first home buyers who are ready to put their foot on the property ladder. The low cash rate continues to drive historically low home loan interest rates. This coupled with unprecedented levels of Government support in the form of grants and incentives creates opportunity for prospective buyers. I would encourage Australians looking to buy their first home to speak to their local mortgage broker to understand how they can access the support available and to put their best foot forward when applying for a home loan,” concluded Ms Mitchell.