The RBA has left the interest rate unchanged at 1.5% at the November monetary policy meeting. This decision has not surprised financial markets and the vast majority of economists.
The board acknowledged that “taking account of the available information, and having eased monetary policy at its May and August meetings, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”. According to Business Insider Australia, this is an indication of the likelihood of another rate cut in the near-term.
The 3 year low of 5.6% in employment rates in the country are said to have impacted the decision to keep the rate the same, along with low inflation. According to REA Chief Economist Nerida Conisbee the spring housing clearance rates reflect the unchanged rate – “The continued strength of the housing market is a further reason for the RBA to keep rates on hold. At the time of the previous cut, house price growth appeared to be moderating. The latest figures from CoreLogic RP Data now show all capital cities achieving growth, with the exception of Perth and Darwin. Melbourne and Sydney are the strongest markets, continuing to achieve more than 9% growth for the year,”
Whilst the parliamentary inquiry into banking institutions passing on rate cuts to consumers is underway, the question on everyone’s mind is what will any future rate cuts mean to consumers. The banks are warning its customers that even though interest rates have never been lower – these rate cuts could still be held back from customers According to Commonwealth Bank Chief Ian Narev during the inquiry “The Reserve Bank cash rate is an important benchmark, but a large number of funding costs exist irrespective of that benchmark. If we were to provide such a product, we would need to take into account all potential factors on the costs of funds.”
Image credits: By Danausi (Own work) [Public domain], via Wikimedia Commons