The Reserve Bank of Australia has this afternoon announced its official position for August 2019. After consecutive rate cuts, and amid speculation of further drops, the RBA has left the official cash rate on hold at 1 per cent.
An update from Real Estate Business discusses the hold in more detail...
This is largely in line with the predictions of the nation’s leading economists, including AMP Capital’s Shane Oliver. Late last week, he said there are knock-on impacts for the central bank to consider before lowering the cash rate any further. Rather, Mr Oliver foresees a cash rate cut towards the end of the year, and possibly another in early 2020. Those moves would bring the official rate down to 0.5 per cent. “The reason I say 0.5 per cent rather than zero is that when the RBA cuts and banks pass that onto people with a mortgage, bear in mind the banks don’t borrow from the RBA, they borrow from depositors and the wholesale money market, so their deposit rates are already close to zero,” Mr Oliver said. In response to consecutive cash rate cuts, as well as the banking regulator easing its guidance and requirements on Australian lenders, access to credit has become progressively cheaper and easier in 2019. This is in stark contrast to 2017 and 2018, where APRA imposed a cap on interest only lending, which had a palpable knock-on impact for property investors.