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Editor’s Note: LIVE ARTICLE
Further commentary will be added as notes from the RBA board meeting become available.
Commentary by Bechara Boutros
The RBA Board has announced their decision to hold rates at 1.5%, signalling a vote of confidence in the economy, and is widely seen as a small win for the Liberal government leading up to the May 18 election.
“The RBA’s decision to hold rates is a huge vote of confidence in the economy, however I am still actively negotiating out of cycle rate cuts directly with banks who are keen to do business. Several banks have already changed their rates leading up to today, so we’re pursuing these opportunities along with others on behalf of clients.”
“I invite anyone who needs to review their loan, or may be purchasing a property to speak with me to see what deal we can arrange for them.”
Housing Not At Forefront Of Board’s Mind
The decision to hold comes after strong market speculation of a potential cut to rates down to 1.25%, however Governor Philip Lowe said in his statement:
“The Board judged that it was appropriate to hold the stance of policy unchanged at this meeting. In doing so, it recognised that there was still spare capacity in the economy and that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings.”
Speaking about housing’s influence on the decision, Lowe acknowledged credit is still tight for consumers and demand has “slowed noticeably”.
“The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft and rent inflation remains low. Credit conditions for some borrowers have tightened over the past year or so. At the same time, the demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased over the past year. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.”