In a move that is likely to surprise few people, the Reserve Bank of Australia’s first board meeting for 2016 has ended with no change to the official cash rate.


The decision means the cash rate remains at 2%, where it has sat since the RBA announced a 0.25% reduction after its May 2015 board meeting.


Tim Lawless, research head at CoreLogic RP Data said the RBA’s decision was likely influenced by employment figures and consumer confidence levels.


“Factors adding to the hold argument were likely to have been around labour markets which have been showing a healthy trend based on the Bureau of Statistics data and retail sales showing a better appetite for households to spend,” Lawless said.


Nicki Hutley, director at consultancy firm Urbis, agreed that current economic conditions likely gave the RBA little reason to move the cash rate.


“The economy is growing a moderate pace. Indicators for employment and inflation suggest current rate stance is appropriate,” Hutley said.


While the decision from the RBA was widely predicted, Lawless said the board of the central bank likely had plenty to weigh up during the decision making process.


“There are plenty of reasons why the RBA may have contemplated cutting the cash rate today,” Lawless said.


“Australia’s terms of trade are approaching 10-year lows due mostly to lower export prices, inflation is tracking at the bottom of the RBA’s target range and the Aussie dollar has once again seen some upwards pressure; however the housing market is playing out exactly as the RBA probably would have hoped:  losing steam without a collapse in values,” he said.


Many commentators have said that recent conditions in Australia’s residential real estate market have likely played a major role in the RBA keeping rates on hold; however Lawless said that is likely to become less of reason as the year progresses.


“With heat in the housing market no longer likely to be a major concern for the RBA, a major obstacle has been removed from preventing rate cuts and we may see the cash rate move lower later in the year,” he said.


“The last three months have seen capital city dwelling values drift 0.6% lower and capital city home values are up by only 0.7% over the past six months. 


“The RBA probably doesn’t need to worry too much about over stimulating the housing market via another rate cut; mortgage rates are already higher than a year ago due to the higher capital requirements implemented by APRA and the pace of investment growth has fallen below APRA’s 10% speed limit imposed in December 2014.”