As was widely expected
, the RBA decided to keep the official cash interest rate on hold at 2% at their board meeting this afternoon.
The decision means there has been no movement of the official cash since the May board meeting.
CoreLogic RP Data head of research Tim Lawless said recent performance of the Australian property likely played a major role in the RBA’s decision making.
“August housing market data from CoreLogic RP Data together with recent data on investor credit growth would have been welcome news to the Reserve Bank when they deliberated on the cash rate setting today,” Lawless said.
“The rate of capital gain eased across the housing market in August; after capital city dwelling values increased by more than two per cent in both June and July, it was reassuring to see that capital city dwelling values grew by a much more sustainable 0.3% in August,” he said.
Recently released investor lending figures would have also have factored into the RBA’s decision, giving the central bank less cause for concern that property markets were out of control.
“Additionally, recent credit data released by the Reserve Bank showed the annual pace of growth in investment credit slipped from a recent annual high of 11.1% to reduce back to 10.8% in July,” Lawless said.
“The slower month of housing data may indicate that the housing boom in Sydney and Melbourne is starting to slow and investment lending is starting to moderate in line with APRA guidelines.”
Lawless said leaving rates unchanged would be a popular decision, especially among those considering property purchases and the RBA would be hoping the decision can bolster markets may not be performing strongly at the time being.
“Dwelling values declined across four of the eight capital cities over the month of August and three capital cities, Perth
and Canberra, have recorded a decline in dwelling values over the past twelve months.
“Home owners and prospective buyers across Australia will welcome the sustained low interest rate setting which will continue to spur buyer demand and help to offset the effects of softer economic conditions outside of Sydney and Melbourne.”
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