Powered by MOMENTUM MEDIA
Receive the latest mybusiness newssign up
RBA announces its February cash rate call

RBA announces its February cash rate call

RBA building

The Reserve Bank has announced its cash rate decision for February, just as the country digests Kenneth Hayne’s explosive final report recommendations.

As widely anticipated, the RBA has left the official cash rate on hold at 1.5 per cent.

Most Australian economists and market commentators were united in predicting another hold, including Leanne Pilkington, managing director of real estate business Laing+Simmons, who said that while there might be some rate surprises ahead, there was no justification to make any rate adjustment right now.

Advertisement
Advertisement

“Some economists now believe the next official rate movement will be down instead of up,” she said.

Ms Pilkington added, however, that all eyes will be on the RBA as the year progresses.

“The Reserve Bank will need firm justification as a move either way will be heavily scrutinised.”

Head of corporate affairs at Mortgage Choice Jacqueline Dearle holds a similar view, particularly around the next move being down.

SPONSORED CONTENT

 

“A myriad signposts continued to suggest rates remaining on hold, but down the track, the next move in the cash rate could well be downward,” she said.

But Ms Dearle said such a move could have wider unintended consequences and suggests the RBA has a lot of “big issues” to consider.

“As wages continue to flatline and spending appears to be fuelled by a mix of credit and savings, consumers may be entering 2019 with a slightly pessimistic view.

“Continued low inflation along with the softening property market and tightened lending environment adds to disappointing Australian economic [data] and global concerns stemming from Trump’s trade war with China.

“The upcoming federal election also adds a feeling of stasis to lackluster economic data.”

AMP economist Shane Oliver called it “unlikely” that the RBA would move the rate today, but also implied a rate cut might be the next play.

“While economic data has generally been soft since the last board meeting in December, it’s unlikely to have been weak enough yet to prompt the RBA to cut rates, particularly given that its bias has still been to raise rates.”

Chief economist at REA Group Nerida Conisbee had also predicted today’s hold result.

“Economic data coming out is still too mixed to make a decision to move rates,” she said.

“While CPI remains low, and GDP growth in September was lower than expected, unemployment is now at just 5 per cent.

“In Sydney, it is at its lowest rate since 1974.”

The decision came just a day after the banking royal commission final report was released, which while relatively sedate on SME lending, contained hard-hitting recommendations for the wider finance sector, including a ban on trail commissions for mortgage brokers.

comments
FROM THE WEB
RBA announces its February cash rate call
mybusiness logo