An early Christmas present for mortgage holders as rates hold steady
The RBA board cited the impact of last month’s rate rise as a determining factor in the decision
2 min
Interest rates will remain at 4.35 percent following a meeting of the Reserve Bank of Australia board today. The decision by the board, which was widely predicted by economists, follows on from the November meeting where rates rose by 0.25 percent, the first rise in four months.
Governor Michele Bullock said last month’s rise was designed to accelerate the decline in inflation which the board considered to be happening at a slower pace than required.
“This decision reflected the Board’s view that progress in bringing inflation back to the target range of 2 to 3 percent was looking slower than earlier forecast,” Ms Bullock said. “While the economy has been experiencing a period of below-trend growth, it was stronger than expected over the first half of the year.”
The increase in the cash rate had been an effective tool in moderating inflationary pressures, she said.
“Higher interest rates are working to establish a more sustainable balance between aggregate supply and demand in the economy,” Ms Bullock said. “The impact of the more recent rate rises, including last month’s, will continue to flow through the economy.
“High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market.”
Head of research at CoreLogic Australia Eliza Owen said last month’s rise had already impacted on the property market, with November property values recording their smallest increase since February at 0.6 percent.
“Recent market performance indicates that while housing has been surprisingly resilient this year in terms of capital gains, interest rate increases have had some impact,” Ms Owen said. “This is particularly the case where rate increases were unexpected. This was evident following the ‘surprise’ rate hike through June, and appears to have had some impact through November.”
While the RBA board will not meet again until February 2024, Ms Bullock would not rule out further rises in the new year.
“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks,” she said in a statement. “In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.
“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”
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Australian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market. The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index. …
Continue reading “ASX falls 0.7 per cent as miners and property stocks retreat”
2 minAustralian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market.
The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index.
Energy was the notable exception, gaining more than one per cent as Brent crude traded above US$103 a barrel. Oil had moved higher amid uncertainty surrounding potential US diesel-export restrictions and broader geopolitical supply risks. The move supported energy producers but renewed concern about inflation inputs across transport and the wider economy.
Gold shares were weak even as spot bullion remained historically elevated. The All Ordinaries Gold index fell about 2.25 per cent, showing that equity performance can diverge from the commodity because of valuation, currency, operating and company-specific factors.
Zip was a prominent loser, falling 11.38 per cent after the company reported short sales after the previous close. Nine Entertainment also weakened after UBS analysts warned of near-term revenue challenges associated with its advertising-supported subscription tier.
Premier Investments led larger winners despite caution about the retail environment. Breville, in which Premier owns a significant stake, also appeared among leading movers. In the broader ASX 300 screen, Myer gained 11.43 per cent and MAAS Group rose 7.93 per cent, while Lotus Resources fell 10.53 per cent. These percentage moves should be checked against company announcements and trading liquidity before attributing causes.
The Australian dollar was broadly flat at US70.38 cents. Spot gold was around US$4,280 an ounce, Brent crude approximately US$103.08 a barrel and iron ore near US$96.90 a tonne late in the session.
The rate outlook remains the central domestic catalyst. Labour-market weakness has not eliminated the possibility of an RBA increase next week, leaving banks, listed property and other rate-sensitive sectors exposed to changing expectations.
Market dashboard
S&P/ASX 200: 8,702, down 0.72 per cent.
All Ordinaries: 8,897, down 0.66 per cent.
Best sector: Energy, up more than one per cent.
Weakest areas: Real estate and materials were the major drags; confirm final sector percentages before publication.
Material winner: Premier Investments led the large-company gainers. Confirm its final closing move from the ASX before publication.
Material loser: Zip, down 11.38 per cent.
ASX 300 percentage leader: Myer, up 11.43 per cent.
ASX 300 percentage laggard: Zip, down 11.38 per cent.
AUD/USD: Approximately US$0.7038, broadly flat.
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