No cut, as RBA leaves rate unchanged


No cut, as RBA leaves rate unchanged

Posted on Tuesday, December 01 2015 at 1:41 PM

Once again, the Reserve Bank of Australia has chosen to leave the cash rate at 2.0 per cent, meaning no more rises for 2015.

Governor Glenn
Stevens said in his message: “At today’s meeting,
the Board again judged that the prospects for an improvement in economic
conditions had firmed a little over recent months and that leaving the cash
rate unchanged was appropriate. Members also observed that the outlook for
inflation may afford scope for further easing of policy, should that be
appropriate to lend support to demand.”

He added: “The
available information suggests that moderate expansion in the economy continues
in the face of a large decline in capital spending in the mining sector.

“While GDP growth
has been somewhat below longer-term averages for some time, business surveys
suggest a gradual improvement in conditions in non-mining sectors over the past
year. This has been accompanied by stronger growth in employment and a steady
rate of unemployment.

“Inflation is low
and should remain so, with the economy likely to have a degree of spare
capacity for some time yet. Inflation is forecast to be consistent with the
target over the next one to two years.

“In such
circumstances, monetary policy needs to be accommodative.”

Stevens also mentioned that growth in
lending to investors in the housing market has eased and that supervisory
measures are helping to contain risks that may arise from the housing market.
The topic had been predicted by CoreLogic RP Data, which reported a 1.5 per cent fall
in capital city dwelling values over the month of November and a 0.5 per cent
fall over in values over the past three months. 

the cash rate remained on hold, a less buoyant housing market is likely to
provide the RBA with a greater degree of flexibility in adjusting interest
rates without as much risk of over stimulating the housing market as they’ve
faced over previous months, a spokesperson says, adding that while the Reserve
Bank is likely to welcome a slowdown in the rate of home value appreciation,
the overriding objective would be to avoid a significant downturn in the
housing market, which would act as a weight on economic growth and potentially
affect financial system stability. 

the stable rate setting, mortgage rates remain close to record lows, which
should continue to act as an incentive for homebuyers and investors considering
a property purchase.

first Reserve Bank board meeting of 2016 will take place in February. 

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