The Reserve Bank of Australia today decided to retain the current official cash interest rate of 1.5 percent. The historic low rate has been maintained for 20 straight months in a row. The experts have pointed to the sluggish growth of wages and the cooling housing market as factors that led to the retention of the interest rate.
In his monetary policy statement, RBA Governor Philip Lowe cited the strong global economy and the growing Chinese economy. Inflation remains low although this has increased in certain economies. He said this is expected to rise owing to the tight labour markets.
As for the Australian economy, the Reserve Bank pointed out it grew by 2.4 percent in 2017 and this trend will continue this year. The main drivers are the positive business conditions and increase in non-mining business investment. Other factors taken into account are the high levels of public infrastructure investment and stronger growth in exports.
In the area of employment, Lowe noted that it has shown strong growth in all states in 2017. This was accompanied by a rise in labour force participation most notably women and older Australians. The Reserve Bank forecasts a solid growth in employment in the coming months with a gradual reduction in unemployment. Wages growth may be low at this time but this is expected to increase over time.
In the housing sector, the markets in Melbourne and Sydney have slowed and price falls were noted in some areas in the past six months. National house prices were flat in March while eight capital cities experienced further drops in values. Additional supply of apartments are expected in the eastern capital cities in the coming years.
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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 Buyers Advocate gives her buyers an experienced voice they can trust when it comes to negotiating to purchase something as important as their new home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.FollowWendy.com for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.
