Home Loan Rates on hold, for now

After three consecutive rate rises, the RBA has decided to leave the official cash rate on hold.

The RBA has raised official interest rates six times since last October, taking the official cash rate from the historic lows of 3 per cent to what the central bank considers a more normal rate of 4.5 per cent.

The escalating debt problems in Europe had led many economists to believe that the RBA would keep rates on hold this month.

Speaking about the decision, RBA governor Glenn Stevens said since the board last met, concerns about sovereign creditworthiness in several European countries have been a focus of financial markets.

“Investors have generally displayed a good deal more caution. As a result, equity prices have fallen and long-term government bond rates have declined outside of the countries most affected by the sovereign concerns. The Australian dollar fell sharply as part of this adjustment,” Mr Stevens said.

“Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near term.”

AMP chief economist Shane Oliver told The Adviser last week that interest rates were likely to remain at 4.5 per cent from now until August, when the Reserve Bank would contemplate pushing rates up again.

Source The Adviser


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