RBA rate announcement

The Reserve Bank of Australia (RBA) has announced the outcome of their last board meeting of the year.

With a steady economy and coming into the holiday season, the RBA has decided to keep the cash rate on hold at 2.5 per cent.

Economists were largely unsurprised at the announcement, despite a mixed outlook for the economy.

The RBA statement two weeks ago was a little more pessimistic than it’s been recently, but it did indicate that they would be prepared to cut rates again.

Unemployment rose from 5.7 to 5.8 per cent over October. That’s still uncomfortably high but the dollar did fall. We saw building approval data out yesterday which was again an improvement, but once again its units rather than houses.

The economic slowdown would have come as a relief to the RBA.

From a housing market perspective the RBA would probably have been quite happy to see the rapid rate of home value growth slow in November. The big question from here is will the slowing continue or rebound back to previous levels.

The RBA has, on several occasions now, stated they are comfortable with the level of capital gains in the housing market. In fact the current rate of growth is well below the highs achieved over previous growth cycles.

 



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