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RBA reveals interest rate decision: March 2019

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RBA reveals interest rate decision: March 2019

Reserve Bank of Australia

The Reserve Bank of Australia has announced its latest verdict on interest rates, following its monthly board meeting.

It once again left official interest rates on hold at the current level 1.5 per cent.

That marks 28 months that the rate has remained unchanged, since it was cut from 1.75 per cent back in August 2016.

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The decision was widely anticipated by economists as well as business and property commentators.

A panel of 31 industry experts compiled by rates comparison site finder.com.au had overwhelmingly forecast another hold this month, although most believe that rate cuts are in store for borrowers later in the year.

Separately, Tim Lawless of property data firm CoreLogic also suggested that rates will remain on hold in the immediate future, until further cuts are made.

“Although the cash rate remains unchanged since August 2016, there is a growing possibility that rates could fall later this year. The strong labour market report for January was likely a key factor in keeping rates on hold; however, in balance, wages have grown at a consistently low rate growth and inflation remains stubbornly below the target range,” he said.

“The sharp slowdown in residential construction activity and relatively benign retail trade figures may be hinting that weak housing market conditions are already spilling over to the broader economy.

“No doubt the RBA [is] tracking housing market conditions very closely, watching for any further deterioration that might signal a dent to consumer spirits, resulting in less spending, more saving and a further pullback in residential construction activity.”

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Mr Lawless noted that figures from his own company showed a 0.7 of a percentage point slump in house prices nationally in February, but the rate of decline had eased so far in 2019 compared with steeper falls — led by Sydney and Melbourne — last year.

“The performance of the housing sector over coming months should provide some clues about future monetary policy decisions,” he concluded.

“A further deterioration in the pace or geographic scope of declines could tip the balance in favour of a rate cut later this year as the RBA becomes wary of the wealth effect moving into reverse.”

Lender Finsure suggested that more interest rate cuts are now “inevitable”, but are just a matter of timing.

Its managing director, John Kolenda, said that the RBA would take a wait and see approach for the next couple of months given the political “distractions” of a federal budget on 2 April and then the federal election expected in May.

“Like the budget, the election outcome and a potential change of government will have a significant economic impact which the RBA will need to factor in,” he said.

Mr Kolenda said: “A rate cut seems inevitable, with so many negative factors weighing down economic activity such as the falling property market, the impact of the Hayne royal commission, concerns about unemployment, the election, the US–China trade war and the Brexit debacle.”

Adam Zuchetti

Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at This email address is being protected from spambots. You need JavaScript enabled to view it.

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RBA reveals interest rate decision: March 2019
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