RBA Leaves Rates On Hold……Again!

Posted in: Insights, News, Video

05/12/2017

As is usual on the first Tuesday of each month, the RBA Board held it’s monthly board meeting where they analyse the performance of the economy and decide what to do with interest rates.  

If the economy is outperforming then there is a bias towards lifting the cash rate and conversely if underperforming then there is a bias towards lowering the cash rate.   Of course there is the option to do nothing and leave the cash rate unchanged.

Once again, for the sixteenth straight month the board decided to leave the cash rate unchanged at 1.50%.   A clear sign that in general the economy remains largely stagnant, despite signs of positive growth in some sectors.   Sixteen consecutive months without a change is somewhat of a record for the RBA and certainly the sentiment remains that the cash rate could well remain unchanged well into 2018.

Clearly this is a welcome relief for those with a mortgage.  But where there are winners there are also losers. Those who are saving money and investing, particularly those who are in or nearing retirement where more conservative investment strategies are common will be lamenting the lower returns on their cash based investments.

The RBA Board does not meet in January, so the next Board meeting and review of the cash rate won’t happen until February 2018.   By then the Christmas retail trade figures will be out and they will be a strong barometer of the strength of the economy and consumer sentiment which will provide further guidance on the outlook for 2018.

Mark Lewis, Managing Director