The Reserve Bank of Australia has retained the current cash interest rate at two percent for the second month in a row.
RBA governor Glenn Stevens said it was appropriate to leave the rate as it is. He added that even with the average growth pace of the economy, the higher rates of borrowing are a positive sign.
At the moment, credit is experiencing moderate growth while borrowing activity by businesses remains strong. On the other hand, growth in lending to housing investors have been steady during the recent months. The strong Australian dollar and the pace of house price inflation in Sydney and Melbourne were also among the major factors cited.
The RBA did not give a hint of a possible rate cut within the year. Westpac believes the current rate will remain throughout 2015 and 2016 although it says risks remained. Some analysts, however, are seeing the rate to be further lowered to 1.5 percent by December.
Meanwhile, the central bank is now coordinating with regulators to prevent growth in mortgage lending particularly for the buy-to-let and buy-to-sell housing investors.
RBA last cut the interest rate by 25 basis points in May making it the lowest so far.
By Wendy Chamberlain
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With a passion for all things real estate spanning 18 years, Wendy loves that her role as a
