RBA leaves cash rate on hold in November

HOLD your horses. The Reserve Bank has left the official cash rate on hold, avoiding a nasty Melbourne Cup day surprise.

The 2017 Melbourne Cup at Flemington racecourse. Picture: Michael Klein

AS WIDELY expected, the Reserve Bank has remained in the stalls on Melbourne Cup day to leave the official cash rate on hold at its record low of 1.5 per cent for the 15th month in a row.

The RBA last cut the cash rate in August 2016, following an earlier cut to 1.75 per cent in May. There has not been an official cash rate increase since November 2010.

Today marks five Melbourne Cups without a change, but the November meeting has traditionally been a popular day to move, with the RBA moving rates up or down every year from 2006 to 2011.

“A slowdown in housing market conditions has helped to alleviate some of the pressure to raise the cash rate,” CoreLogic head of research Tim Lawless said in a note.

“The fresh round of macro-prudential policies announced in late March have resulted in tighter credit policies and premiums on mortgage rates for investors and interest-only borrowers.

“Tougher lending conditions have arguably had a similar effect as a lift in the cash rate, except the effect is more focused on slowing investment activity across the housing sector while low interest rates continue to provide a broader and much needed economic stimulus.”

It comes after house price data for October showed Sydney home values continued to slide in October, with the nation’s biggest housing market recording its first quarterly fall in prices since May 2016.

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Originally published as RBA leaves cash rate on hold in November