Tighten The Reigns – RBA Keeps Cash Rate On Hold Yet Again

Market Updates

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After eight months of an all-time low cash rate and speculation surrounding the eventual rise, the RBA have decided to leave us on the edge of our seats for not one but two more months. With the next board meeting not until February, C&G have decoded the cash rate hold and explain what it means for the property market.

It’s certainly starting to feel like déjà vu. Another month, another board meeting, and yet another rate hold at an all-time low of 2%. Earlier in the month, finance pundits had anticipated a further cut - or even an interest rate rise - but thanks to an improving employment market, Tuesday’s interest rate hold was generally expected.

Another ‘watch and wait’ approach appears to have been championed by governor Glenn Stevens, with the RBA keeping further rate cuts up their sleeve for when economic stimulus is truly needed. Continuing strong employment data and anticipated shifts in the property market over the summer months may influence the February board meeting outcome, but for the time being, the 2% rate lives on.

The apparent slowing of growth in some sectors the property market offers the RBA far more capacity to shift rates without fear of overstimulating the market – a reason which has encouraged the rate to remain low thus far. The ‘Board’ want to see a slowing in the growth of house prices, hoping that the low rate from Australian lenders is enough to naturally simulate the housing market as a whole, avoiding the stagnation of what is overall a booming environment.

With Glenn Stevens leaving himself plenty of room to make a further rate cut at the next meeting – economic conditions dependent, of course – the two imminent ‘buffer’ months give investors some degree of certainty for the foreseeable future.

Unsure of the right move to make in early 2016? Chisholm and Gamon are here to help you navigate your property journey, whether selling for the first or umpteenth time, finding your first home, leasing an asset or renting the perfect bayside home.