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Australia's leading economists still expect a number of hikes before year end as the government seeks to keep inflation in check
This month the RBA decided against lifting the cash rate but the question home owners are asking is for how long?
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The latest inflation figures have shown that the Consumer Price Index (CPI) rose by 0.6 per cent in the June quarter, lifting the annual rate to 3.1 per cent - just outside the RBA's target of 2 to 3 per cent.
In its monetary policy statement this month the RBA board said growth trend factors, coupled with close to target inflation and an uncertain global outlook, influenced its decision to leave the cash rate unchanged for the third month running - good news for now.
What also bodes well for home owners is the slowing of house price growth and lower levels of lending activity - a clear indication that previous rate rises have taken effect.
RP Data senior research analyst Tim Lawless has welcomed the RBA's decision to keep rates on hold, saying the slowdown in market conditions has prompted the rate halt.
"Month-to-month capital gains in Australia's capital city housing markets had been trending downwards since January and slipped into the negatives with a result of -0.7 per cent in June," Mr Lawless said earlier this month.
"The slowdown in Australia's capital city housing markets, together with a moderate CPI figure, which was below market expectations, would have been an important consideration by the RBA to keep rates on hold," he said.
But while rates remain on hold for now economists warn that home buyers can expect to see further increases in the future.
AMP chief economist Shane Oliver said despite a similar prediction, the RBA still retains a clear tightening bias and will continue to keep inflation within target levels.
"The RBA will continue bearing down on the economy," Mr Oliver recently told The Adviser.
Mr Oliver added that high export prices coupled with improved business investment, consumer spending and solid employment recovery will see rates reach "near top" levels of 5.5 per cent by end of 2011.
