03 Jul RBA keeps rates on hold at 3.5 percent
Mortgage holders hoping for a third successive rate cut will have to wait at least another month after the Reserve Bank of Australia today left the official interest rate on hold at 3.5 percent.
Announced at 2.30pm AEST, the RBA board’s decision comes as no surprise to economists who widely backed no change to the official cash rate this month.
“At today’s meeting, the board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate,” RBA governor Glenn Stevens said in a statement.
A survey of 21 economists conducted by AAP earlier this week found unanimous belief that rates would stay on hold following the release of positive employment and GDP figures.
The RBA has slashed 75 basis points from the official rate since May with two successive rate cuts.
Last month the board responded to growing fears of an impending recession in Europe, gifting borrowers a 25 basis point rate cut.
While the board has held firm at 3.5 percent for now, there may be further rate cuts to come in 2012.
Most economists surveyed by AAP expected the RBA to make one further rate cut to 3.25 percent before the end of the year.
Michelle Hutchison, spokesperson for financial comparison website RateCity, said the decision to hold would allow the board to see the results of the last rate cut flow through to the economy.
“We haven’t seen the RBA move so dramatically for almost three years so it’s not surprising that they decided to hold the cash rate this month,” she said.
The decision to hold gives the board a buffer in case global economic conditions deteriorate.
Ms Hutchison said now may be a good time to seek a discounted mortgatge rate as “many lenders will negotiate to secure good customers” when business is slow.
“The average standard variable rate now stands at 6.39 percent, but borrowers with a 20 percent deposit or 20 percent-plus equity should be aiming for a rate of below 6 percent,” she said.
[blue]Source: NineMSN http://finance.ninemsn.com.au/newsbusiness/8493454/rba-keeps-rates-on-hold-at-3-5-percent [/blue]