Official Cash Rate remains at 3.6%
The Reserve Bank of Australia (RBA) Board at it's September meeting unanimously decided to leave the cash rate unchanged at 3.6%, an outcome widely anticipated by market watchers.
• In making their decision to keep interest rates on hold the RBA acknowledged that the monthly inflation data rebounded in August. With ‘price stability’ as the key priority for the RBA, it acknowledged that the September inflation figure was likely higher than the RBA’s forecast.
• The RBA has assessed the housing market as ‘strengthening’ with credit ‘readily available to both households and businesses’.
• Employment growth has slowed, but overall labour market conditions are still considered ‘a little tight’, which implies no immediate need for stimulatory measures.
• The RBA remains alert to ‘elevated’ uncertainties about the outlook for the global economy and its impact on the domestic economy. The RBA considers the current monetary policy setting as ‘well placed’ to respond to global developments.
Implications for the property sector Property market activity is influenced by a wide range of factors, of which interest rates are one. June quarter lending data suggests that new loan commitments have rebounded for both the owner occupier and investor categories. The rate cuts in May and August will likely continue to fuel housing loan demand in the coming months, due to improved household confidence and loan serviceability. The Australian Government’s First Home Guarantee scheme, which allows eligible first-home buyers to purchase a property with a 5% deposit – effective 1 October – will also likely have a stimulatory effect on property market activity in the near term.