RBA decision: Interest rates on hold again

The Reserve Bank of Australia has again held the cash rate at 0.25 per cent at its September meeting on Tuesday, which is a vote of confidence in the economy.

While this should provide some support for the property market, other factors are leading to flat conditions heading into the spring selling season.

Property group PRD’s economist Diaswati Mardiasmo says one of the reasons why the RBA has held the cash rate is to provide a sense of stability in the economy.

“Expansionary monetary policy such as cutting the cash rate is used to assist the economy when it’s declining in health. The RBA cutting the cash rate further may impact consumer confidence as it signals the economy is in trouble,” says Mardiasmo.

The RBA’s decision to hold the cash rate at 0.25 per cent means interest rates on loans will remain stable, which will help many households and businesses manage their cash flow.

“This means businesses are able to keep operating at current levels, ensuring stable or increasing employment and contributing to a healthier economy outlook,” she says.

AMP Capital senior economist Diana Mousina says the cash rate setting is appropriate for the moment. But the RBA may need to reduce the cash rate in the future to support the post-COVID-19 pandemic economic recovery.

Source  - Domain