The Reserve Bank of Australia met today to decide on the cash rate for the month ahead.
Following their meeting the Governor of the Reserve Bank, Phillip Lowe, released his monetary policy decision statement and as anticipated by Australia’s leading economists it was announced that the cash rate will remain on hold at 1.5% for June 2017.
In his statement Mr Lowe made the following comments:
- Looking forward economic growth is expected to increase gradually over the next couple of years to a little above 3 percent;
- The various forward-looking indicators point to continued growth in employment over the period ahead;
- Wage growth remains low and is likely to continue for a while yet;
- Inflation is expected to gradually increase as the economy strengthens;
- Slow growth in real wages is restraining growth in household consumption;
- The outlook continues to be supported by the low levels of interest rates;
- Conditions in the housing market vary considerably around the country;
- Growth in housing debt has outpaced the slow growth in household incomes; and,
- The recent supervisory measures should help address the risks associated with high and rising levels of indebtedness.
To read the full monetary policy statement released by the Reserve Bank please click here.
Tim Lawless, head of research at Core Logic, offered his opinion on this month’s cash rate decision explaining that “while the cash rate has remained on hold in June, financial markets are starting to lean more towards a cut in official interest rates rather than a stable rate setting.”
Mr Lawless said that the most recent cash rate cuts in May 2016 and August 2016 added heat to the housing market, but that another rate cut would be less likely to reignite the market.
Capital chief economist at AMP, Dr Shane Oliver, expressed his agreement with this view, saying that the chance of another rate cut by the end of this year is steadily rising.
If you have any questions about this month’s cash rate decision and how it affects you, don’t hesitate to send us an email or give us a call on 1300 663 943.
Interest rates are still at an all-time low and competition between lenders is strong.
With interest rates constantly changing and new products frequently being launched, it is recommended that you regularly review your financial solutions to ensure that they continue to meet your needs as the property and finance markets change.
iconic offer a complimentary mortgage review service where you can meet with one of our brokers to review your current financial solutions and assess whether there is a solution more suitable now available.
To find out more about some of the benefits that can come from a mortgage review please click here.
Thanks for reading guys and all the best for the month ahead.
We will be back next month with the first cash rate for the 2017/18 financial year.