Reserve Bank of Australia leaves official cash rate on hold in July
THE Reserve Bank has opted to leave the official cash rate on hold in July at 2.5 per cent, in a move widely expected by economists.
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THE Reserve Bank has opted to leave the official cash rate on hold at 2.5 per cent in July.
It’s the tenth month in a row the rate has remained unchanged, in a move that was widely expected by analysts and economists.
The statement from RBA Governor Glenn Stevens said the decision was based on the fact growth in the global economy is continuing at a moderate pace and conditions remained ‘accommodative.’
“In Australia, recent data indicate somewhat firmer growth around the turn of the year, but this resulted mainly from very strong increases in resource exports as new capacity came on stream; smaller increases in such exports are likely in coming quarters,” the statement said.
It also noted that while resource sector investment is starting to decline, there has been stronger consumer demand and an expansion in housing construction is underway.
“There has been some improvement in indicators for the labour market in recent months, but it will probably be some time yet before unemployment declines consistently. Growth in wages has declined noticeably. If these and other domestic costs remain contained, inflation should remain consistent with the target over the next one to two years, even with lower levels of the exchange rate,” the statement said.
The Australian dollar was hovering around 94 US cents ahead of the decision, trading higher after weak economic data in the US sent the greenback lower last week.
Finder.com.au spokesman Justin Toladro said despite the steady outlook for interest rates the market for first homebuyers is weak.
“Even though the cash rate has sat at a record low of 2.5 per cent for almost a year, it hasn’t encouraged more Australians to enter the property market.
“In fact, we’ve seen a decline in the proportion of first home buyers out of all loans financed since the cash rate began to fall in November 2011. From this time the proportion of first home buyers has dropped from 20.21 per cent to 12.26 per cent.”
Originally published as Reserve Bank of Australia leaves official cash rate on hold in July
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