The RBA confirmed today that the official cash rate will remain on hold at a record 0.1%. The Board restated its position on keeping the rate at its current level “until actual inflation is sustainably within the 2 to 3 per cent target range [which the Board expects] will not be met before 2024”.
RBA Governor Philip Lowe stated that the impact extended COVID-19 lockdowns were having on Australia was significant.
The Delta outbreak continues to affect the recovery of the Australian economy and the RBA expects the GDP to see a significant decline in the September quarter.
The RBA believes this setback to the Australian economy is temporary. As vaccination rates increase further and restrictions are eased, the economy is expected to bounce back.
The continued resilience of the housing market is certainly helping keep Australia’s economy above water and once lockdowns are over, the activity will be robust. The RBA Governor, Mr Phillip Lowe stated,
“Housing credit growth has picked up due to stronger demand for credit by both owner-occupiers and investors. The Council of Financial Regulators has been discussing the medium-term risks to macroeconomic stability of rapid credit growth at a time of historically low interest rates. In this environment, it is important that lending standards are maintained and that loan serviceability buffers are appropriate”.
The RBA has consistently stated in recent months that the official cash rate is unlikely to change before 2024. The record low interest rate is just one factor underpinning continued demand for housing across the nation.
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