RBA keeps cash rate on hold at 2 percent

On Tuesday afternoon, the Reserve Bank of Australia announced to keep the cash rate at 2 percent, which is considered to be slightly higher than their all-time low cut rates.

According to Finder.com.au's monthly survey, 31 economists had expected the board to keep the cash rate on hold at 2 percent. However, they were sceptical due to borrowing costs and strong retail sales, and later with the release of the retail trade figures, the option of cutting down the cash rate vanished, with total turnover increasing 0.7 percent in June.

AMP Capital chief economist Dr Shane Oliver said there hasn’t been any significant transformation since the last RBA meeting and the board hasn’t planned anything as yet for the last rate cut of the year. He appreciated the retail trade figures and said that housing prices in Sydney and Melbourne have kept strong. “They’ll probably want to see more evidence that APRA’s moves to slow property investor buying in Sydney and Melbourne have worked,” he said.

Money expert Michelle Hutchison said that an increase of 2.8 percent in national monthly rents could be witnessed; that is AU$59 per month, which has been calculated based on thee average home loans of AU$343,000 over 30 years. She warned Australians about the rise in costs, which sooner or later, would affect everyone irrespective of a mortgage holder, renter or prospective first homebuyer. She also asked them save up for the future.

RBA Governor Glenn Stevens insisted that accommodative monetary policy should be adopted as housing prices surge in Sydney and other cities as well. He assured that the bank and regulators were working together to contain the risks that could possibly result from the housing market. “The Australian dollar is adjusting to the significant declines in key commodity prices,” he added. The local unit is now at AU$ 0.7351– a gain of nearly one cent on the last 24 hours trading.

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