Rates Set to Hold Until November

After a torrid two months of slashing, the Reserve Bank board is expected to hold fire until November on any further interest rate cuts — but there’s still lots to celebrate for buyers.

Experts agree that November is the month the RBA board is most likely to make its next move on rates, as it waits for its shock two cuts in a row to take hold along with government action to boost consumer spending.

Reserve Bank of Australia Governor, Philip Lowe, saw the board hold at 1 per cent cash rate target on Tuesday afternoon.

This after the RBA finally moved its cash rate target down to 1.25 per cent in June, followed rapidly by another 0.25 percentage point drop again in July to even out at 1 per cent. Before that it had stagnated at 1.5 per cent since August 2016.

Aligned with APRA loosening its grip on lending conditions, boosting the chances of those applying for mortgages, the moves were expected to see some lift in the economy.

For the first time since last month’s cut, Monday saw the RBA Rate Indicator swing in favour of a cash rate target decrease to 0.75 per cent.

“As at 5 August, the ASX 30 Day Interbank Cash Rate Futures August 2019 contract was trading at 99.115, indicating a 57 per cent expectation of an interest rate decrease to 0.75 per cent at the next RBA Board meeting.”

That might not be enough though — with 96 per cent of experts and economists in the latest Finder RBA Cash Rate Survey convinced there RBA will hold at 1 per cent for several months.

Either way, Finder insight manager Graham Cooke said the RBA board would be hesitant to cut three months in a row.

“The jury’s out on the impact of these most recent cuts — it’s simply too soon to tell,” he said. “Economists feel slightly more confident that recent cuts will have a positive effect on the economy once given time to roll out. While positivity is generally still low, housing affordability remains the most positive economic element.”

Mr Blythe said CBA could “only agree” with a comment by RBA Governor Philip Lowe that “it is reasonable to expect an extended period of low interest rates”.

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The above information has been sourced from Realestate.com.au. To read the full article CLICK HERE.