RBA Leaves Cash Rate Unchanged After May’s Cut

Real Estate News

RBA Leaves Cash Rate Unchanged After May’s Cut

This widely anticipated announcement came yesterday from the Reserve Bank of Australia, and the result is unlikely to surprise many. Following May’s rate cut to 1.75%, the RBA has chosen to hold the rate steady. Today, C&G explore what this means for the future of the economy and property owners.

After cutting the rates to an all-time low of 1.75% in May, Governor Glenn Stevens today announced that the cash rate would remain on hold for another month. It doesn’t come as a huge surprise, as the dramatic cut we saw last month is likely to remain in effect for a while longer, allowing the board to assess its impact.

The low interest rates have been stimulating domestic demand - and in the overall economy, data suggests steady growth is still underway, with the low exchange rate boosting trading. Inflation remains low, but is expected to remain so for the foreseeable future.  

Such low levels of inflation are encouraging speculation surrounding a further rate cut, but in terms of real estate, the government will likely look to offset the rise in capital city home values – which, as of last week, was reported at a 1.7% increase. A further rate cut could fuel property prices further, so the RBA are keeping a close eye on asset values as decision-making continues.

Experts are, however, dubbing the inflation rate ‘low enough’ to warrant a further rate cut. This generates an expectation for more regulatory action to be taken to cool housing demand, to grant the RBA the freedom to make another rate cut to stimulate the wider economy.

With some uncertainty surrounding the issue of capital gains and a possible impending further rate cut, it can be a confusing time as a vendor or buyer. Chisholm & Gamon are on hand to talk you through your options and help you navigate your real estate journey throughout the ever-changing Australian economic climate. One thing’s for sure: C&G continue to see record housing prices and robust demand from the buying community in the premium Bayside locales we’re fortunate to represent.