RBA announcement: cash rate to stay at 2%

RBA announcement: cash rate to stay at 2%

Posted on Tuesday, June 02 2015 at 2:45 PM

The Reserve Bank of Australia’s governor Glenn Stevens announced today that the cash rate will remain at two per cent for at least another month.

In his
statement, he said: “In Australia, the available information suggests the
economy has continued to grow, but at a rate somewhat below its longer-term
average,” adding that “low interest rates are acting to support borrowing and
spending”.

“Having
eased monetary policy last month,” Stevens said, “the board today judged that
leaving the cash rate unchanged was appropriate at this meeting. Information on
economic and financial conditions to be received over the period ahead will
inform the Board’s assessment of the outlook and hence whether the current
stance of policy will most effectively foster sustainable growth and inflation
consistent with the target.”

The recent finder.com.au
Reserve Bank survey found that all 34 respondents were agreed that the cash
rate would stay on hold for June. Most of the experts felt that the RBA would
be conducting a “wait and see” approach, after last month’s cut.

BIS
Shrapnel’s Richard Robinson said: “They’ll
wait for a time when the rate cut will help engineer a fall in the dollar.
Residential markets are still too buoyant.” 

Last
month’s decision to deliver a 25 basis point cut did help create a late autumn
property rush in Queensland, according to Raine Horne Beenleigh
co-principal Dennis Wey.

“Up
until early May the market in Logan City had been stuttering and the February
rate cut hadn’t been much help,” he says.

“But
when the RBA slashed rates to a record low of two per cent, the autumn property
market took off.

“The
enquiry level jumped immediately and was ferocious, with investors from Sydney
leading the charge.

“The
Sydney investors have recognised that there is plenty of value in our region
and we expect the May rate hike will provide the fuel that gets the Beenleigh
market motoring.”

In
the Moreton Bay region, the May rate cut helped drive up demand in suburbs such
as Burpengary, Narangba, Morayfield and Caboolture, according to local agent
Gina Wells.

“We
had a record month in April, doubling our sales averages,” she says.

Apart
from lower interest rates, Wells confirms there has been a significant surge in
Sydney investors, which is driving the Moreton Bay market.

“This
autumn market has been better than a traditional spring market, and we’re
getting back to boom levels with prices starting to rise,” she adds.

 

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