RBA holds rates despite ‘brisk’ house prices

Tim Stewart
— 1 minute read

Despite continuing to forecast Australian GDP growth of “a little above” 3 per cent, the RBA has once again held the official cash rate at 1.5 per cent.

In his statement accompanying the RBA's announcement yesterday, governor Philip Lowe noted there has been a "broad-based pick-up in the global economy" and core inflation continues to remain low.

The RBA's forecasts for the Australian economy continue to be relatively bright, with GDP growth expected to "increase gradually over the next couple of years to a little above 3 per cent".


Mr Lowe said the RBA's outlook is supported by low interest rates, and pointed to the big banks' recently announced increases in mortgage rates for interest only loans.

"The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment," he said.

Finally, Mr Lowe spoke about house prices, which he said have been rising "briskly" in some markets (i.e., Sydney and Melbourne) but declining in others (i.e., Perth).

"In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades," Mr Lowe said.

"Growth in housing debt has outpaced the slow growth in household incomes. The recently announced supervisory measures [by APRA] should help address the risks associated with high and rising levels of indebtedness.

"Taking account of the available information, the board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time."

Read more:

Researchers downgrade Ausbil's microcap fund

New investment head for Shaw and Partners

Productivity improvement a focus for India

ANZ half-year profit up 23%

Capital preservation is key: Prime Value



RBA holds rates despite ‘brisk’ house prices
investordaily image
ID logo

related articles

  • Fortunes flag for Perpetual

    Perpetual Investment’s funds under management (FUM) have decreased by $1.1 billion over the last quarter as the market continues its move ...

  • ETPs to surpass $60bn

    The Australian exchange-traded product (ETP) industry is likely to reach $60 billion by the end of the year according to one provider, with ...

  • EMD needs specialists, not generalists

    Investors interested in emerging market debt (EMD) should employ specialist managers in order to succeed, according to a report from Willis ...

promoted stories

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.