This month’s Reserve Bank of Australia cash rate decision has just been announced; the last decision for this year in what has certainly been a jam packed 12 months. I’m pleased to share this update with you and the thoughts on why the Reserve Bank of Australia has made this call.
The RBA elected to adopt a wait and see approach over the Christmas and New Year period and has left the cash rate on hold at 1.5%. Between now and its next meeting in February, the Reserve Bank will weigh up a number of factors including the ‘Trump effect’ which some lenders are attributing to rising funding costs and consequently increasing fixed loan interest rates. Low inflation, slow economic growth, improving commodity prices, a stronger Australian dollar and ongoing concerns around some inner city property markets are among the other factors the RBA will need to take into account.
The Government appears confident that the Australian economy will not be too badly affected if China’s economy grows at a slower pace however the RBA is concerned that low interest rates could lead to a dangerous asset pricing bubble leaving quite a confused picture which lenders will react to in different ways.
Of course, one of the many benefits of having Simplify Finance as your mortgage broker onside is that we are very happy to speak to you at any time to ensure you still have the right financial solution for your current circumstances.
The next rate announcement will be in February and I look forward to keeping you up to date with the latest finance news in 2017.