Interest rates to stay at record low: RBA

The Reserve Bank of Australia has announced the official cash rate will remain at a record-low 2.5 per cent for the 11th consecutive month, as forecast by experts.

All 18 economists surveyed by comparison website finder.com.au had forecast that rates would remain on hold.

RP Data research director Tim Lawless said the Reserve Bank’s decision had been influenced by conditions in the Australian property market.

“RP Data recently reported that dwelling values were down 0.2 per cent over the June quarter, dragged down by a very weak May result and a partial recovery of values in June,” he said.

“Policymakers, including the Reserve Bank, are likely to be reassured by the slowdown in housing market conditions, where the rate of growth earlier in the year was increasingly viewed as unsustainable.”

LJ Hooker’s chief executive officer, Grant Harrod, said the start of a new financial year combined with the traditionally quieter winter market, always made changes to the rate unlikely.

“The continued stability of rates will give buyers extra confidence, even with speculation an increase will eventually come,’’ he said.

“We have seen property price growth soften as the market heads into winter, but even still, demand is strong as seen in the volume of sales and auction clearance rates around Australia’s various markets.’’

Meanwhile, ANZ chief economist Warren Hogan told the finder.com.au survey that the economy had been playing out as expected for the Reserve Bank.

“We’re seeing non-mining activity continue to improve and we’re seeing job creation, so essentially monetary policy is set to remain on hold for an extended period of time,” he said