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by Rebecca Pike
The Reserve Bank of Australia (RBA) has kept the cash rate at 1.5% for the 18th consecutive meeting.Experts had predicted the central bank would be keeping the April rate at this same level, where it has sat since August 2016.
According to a recent survey by HashChing, more than 95% of its brokers believed the rate would remain on hold. Panellists from a separate finder.com.au RBA poll also forecasted a static April rate, with just one respondent predicting a hike to 1.75%. About 83% of experts in the same survey believe the next rate move on 1 May will be an increase.
CoreLogic head of research Australasia, Tim Lawless, agreed. While the RBA has suggested the next move in rates will be a rise, he said it remains likely that any hike to the cash rate is well in the future.
“Despite the hold decision from the RBA, mortgage rates remain close to historic lows, particularly for owner occupiers who are paying down both their interest and principal. Investors are facing a mortgage rate premium of around 60 basis points, but relative to long term averages, their mortgage rates are low,” Lawless added.
On the other hand, ABC Bullion chief economist Jordan Eliseo believes the next move will be a cut, as recent data will have “dented” the bank’s outlook for employment, inflation and overall economic growth.
In a statement on Tuesday, RBA Governor Philip Lowe said the low level of interest rates is continuing to support the Australian economy. “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual,” he added.
Despite April’s cash rate hold, 1300HomeLoan has warned that some lenders might be increasing their home loan interest rates. “While the RBA looks like keeping its cash rate on hold, there are some lenders facing increases in the cost of their wholesale funding which they blame on the impact of US economic policies,” said 1300HomeLoan managing director John Kolenda. “They have already lifted rates for business loans and have warned they may have to also pass on these increases to home loans.”
