RBA keeps interest rates on hold in September
By Jonathan Chancellor
Tuesday, 04 September 2012
The Reserve Bank of Australia has kept the official cash rate on hold at 3.5% today at its September meeting saying, as a result of the sequence of earlier decisions, interest rates for borrowers are a little below their medium-term averages.
Its the third consecutive meeting with no adjustment.
“The impact of those changes is still working its way through the economy, but dwelling prices have firmed a little,” the bank said.
The last time the RBA adjusted its cash rate setting was in June, when it reduced the cash rate by 25 basis points from 3.75% to 3.5%.
In mid-August NAB changed its outlook on interest rates and is now the second lender forecasting interest rates to rise by mid-2013.
Before today’s meeting, Westpac chief economist Bill Evans said “additional interest rate relief will be required to ensure robust growth of the Australian economy during 2013″.
Tim Lawless, the RP Data national research director said from a housing market perspective, the RBA’s decision to keep rates on hold comes as no real surprise.
Based on the RP Data-Rismark Home Value Index we have now seen capital city property values remain in the black over three consecutive months with a 1% increase over June, 0.6% in July and no change in August.
“The improved market conditions over winter are a decent indication that conditions across the Australian housing market, at least from a macro perspective, is starting to stabilise.
“While a further rate cut would be a welcome development from the industry, the RBA would be conscious of not overstimulating the housing market, in fact, stable home values are probably exactly what they are hoping for with the current interest rate setting.
“We may start to see the current interest rate setting start to flow through to other areas of the housing sector; dwelling approvals remain very low and we are yet to see a sustained improvement in transaction numbers despite the improvement to housing affordability,” Mr Lawless said.