RBA holds steady at 2%
September 01, 2015
What’s the RBA thinking?
The RBA has looked through the volatility across global markets recently and focused on the underlying fundamentals driving the Australian economy. Business and consumer confidence has stabilised, the Australian dollar has fallen and employment growth is improving.
Today's decision shows that the RBA is prepared wait to see what effect a slowing Chinese - and rising US - economy has on Australia's growth prospects.
Effect on property markets
Today's decision will ensure that property markets around the country continue down their current path and remain dependent on the strength of state and local economies. Property prices are still rising in most capital city markets, however investor lending restrictions and a large rise in the number of new listings hitting the market is expected to see the rate of growth begin to moderate.
- Capital city dwelling values increased 1.3% in August to be 10.9% higher compared to last year.
- New listings are now up 7.0% while total listings are now 0.3% higher compared to last year.
- The unemployment rate increased from 6.1% to 6.3% in July.
- Annual inflation is contained at 1.5%. Below the RBA’s target range of 2% to 3%.
- The RBA is now "comfortable" with the Australian dollar at US$0.71
- A big concern for the RBA is that business spending was down -4.0% in June 2015 quarter.
The recent global equity market volatility and softer than expected business investment data may see the RBA cut interest rates again this year. One of the key drivers that will shape their decision will be determined by how investors react to bank lending restrictions and how much 'heat' comes out of the Sydney and Melbourne property markets over the remainder of the year.
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