Interest Rate Update Sept 2015
By | 3rd Sep 15

An update on the RBA decision to keep rates at the same rate.

The Reserve Bank of Australia has delivered the result of its monthly board meeting and the board members have voted to leave the cash rate the same.

The rate has been at a record low of 2 per cent since May. Most economists and commentators across the board had predicted this result with some observers believing the Reserve Bank is still waiting to observe the last rate cuts in February and May. 

While some experts believe the Reserve Bank will further lower the cash rate to stimulate the sluggish economy, others believe the rates will go up. The second school of thought is believed to be a way of taking some of the heat out of the Melbourne and Sydney housing markets.

Factors that have been considered include current weak commodity prices and the lack of business investment. In addition to that the devaluation of the Chinese currency and weak unemployment report has contributed to this. The unemployment rate jumped from 6% to 6.3% in August, whilst inflation is running at 1.5 per cent which is well below the board’s targets band of 2-3 per cent.
Macquarie bank have advised “the combination of the Chinese currency devaluation, a weakening labour market and excess capacity in the economy all support the case for a further rate cut in November.”

Whilst Westpac chief economist Bill Evans said the cash rate would probably remain at 2 per cent until at least 2017. “We are currently looking for some modest improvement in [economic] growth in 2016 back towards around 3 per cent, a level that would likely maintain steady rates,” he said.

The next RBA board meeting will be held on Tuesday 6 October where it is our prediction that rates will be kept on hold again. 

For the full report from the RBA, click here.

To discuss how this will affect your property portfolio or to discuss any of your property needs, contact our experienced team of Property Consultants on 03 9883 8900.