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The Reserve Bank of Australia’s decision to leave the official interest rate on hold at yesterday’s monthly board meeting has been welcomed by the mortgage industry.
For the second consecutive month, governor Glenn Stevens announced the cash rate would be left unchanged at the record low 1.75 per cent.
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Following the RBA’s announcement, Firstmac chief financial officer James Austin said the Reserve Bank made “the right move” and provided scope “for further cuts in the short term”.
“As expected, the Reserve Bank has left interest rates on hold. I think they would like some more time to see the effect of the cut that happened in May,” Mr Austin said.
“It is likely that we’ll see a rate cut in the months ahead. But they do want to see some more inflation data before they make that decision.
“Continuing high house prices, particularly in Sydney and Melbourne, have cautioned them to remain on hold but I think that with low inflation, and a high Australian dollar it is likely that a further rate cut will happen soon.”
Housing Industry Association chief economist Harley Dale echoed Mr Austin’s comments. Mr Dale said he was not surprised by the RBA’s decision, but there may be an opportunity for the board to cut rates further later this year.
“Thanks in no small part to the strong contribution a national housing construction boom provided to the broader Australian economy in early 2016, a second reduction in official rates was never on the cards in June,” Mr Dale said.
“We live in a very fluid economic environment so it is appropriate that the RBA is willing to cut rates further this year, should it deem that necessary.
“It is quite clear that the bank is leaving the door wide open.”
[Related: Westpac announces major home lending changes]
