Rate hold accompanies stabilising housing market

At its April meeting held last week the Reserve Bank of Australia elected to keep the official cash rate on hold at 4.25 per cent for the third consecutive month.  From our perspective at CENTURY 21 Australia, this move will help to create ongoing stability for those Australians considering the purchase of a property.  

According to CENTURY 21 Chairman and Owner, Charles Tarbey: “This move suggests that the Reserve Bank of Australia is relatively comfortable with current economic conditions for the time being and, at a time of comparatively low interest rates, will encourage many Australians to act on a property purchase.”

In his statement following the announcement, Reserve Bank Governor Glenn Stevens noted that recent information does not suggest that a deep downturn in the world economy is occurring, while also recognising that it is expected to grow at below-trend pace this year.  

He also touched on the Australian economy, saying that growth in domestic demand ran at its fastest for four years in 2011, driven by private spending.  Despite this, “the balance of recent information suggests that output growth was somewhat below the trend.” Glenn Stevens also noted that there are differences in performance between sectors, and considerable structural change is occurring.  

Regarding inflation, a key influencer of monetary policy, Governor Stevens mentioned that inflation was expected to be within the 2 – 3 per cent range over the coming one to two years.  According to the Governor: “At its next meeting the Board will have a chance to reassess the outlook for inflation, taking into account not only data on demand and output but also forthcoming information on prices.”

Interestingly, in concluding Governor Stevens noted that the Board’s view was that should demand conditions materially weaken, the inflation outlook would provide scope for easier monetary policy.  According to the Governor: “At today’s meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.”

Thus, depending on the nature of key data sets which are to be released prior to the Reserve Bank’s May meeting, there may be the potential for a rate cut next month.  The next few weeks will certainly be an interesting time of information release and commentary to say the least.  

For more information on real estate in your area, please feel free to contact your local CENTURY 21 Australia agent.  

Posted by Charles Tarbey on 10/04/2012 at 10:17 AM | Categories:


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