Interest Rates On Hold Despite House Price Climb
The RBA holds firm on its monetary policy.
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The Reserve Bank of Australia (RBA) has held interest rates once again today – remaining firm on its plan of steadying rates for the foreseeable future.
Following its meeting this afternoon, RBA governor Philip Lowe announced the rate would remain at 0.1 per cent.
The decision comes as low interest rates add further fuel to national house values – with dwelling values rising 2.2 per cent in May according to data from Corelogic.
The RBA “will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained,” said Dr Lowe, in a statement.
However, any hike to the interest rates is unlikely to happen “until 2021 at the earliest,” reiterated Dr Lowe.
The RBA also indicated it may inject more stimulus into Australia’s economy to super-charge its recovery, despite Dr Lowe conceding that “the economic recovery in Australia is stronger than earlier expected and is forecast to continue.”
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
After appeals to cashed-up Australians to stop spending, there’s a little inflationary relief in sight
2 min
The rate of inflation in Australia has fallen to 4.9 percent, according to data from the Consumer Price Index. Inflation is down from 5.6 percent in September and a peak of 8.4 percent in December 2022.
The housing, transport and food and non-alcoholic beverages sectors were the strongest contributors to the October increase, which is consistent with trends shown in ABS data from September.
“CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel,” said acting head of price statistics at the ABS, Leigh Merrington. “It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation.”
Food and non-alcoholic beverages rose from 4.7 percent in September to 5.3 percent in the 12 months to October, driven by the rising prices of melons and bananas.
In good news for would-be home builders, new dwelling prices rose 4.7 percent, the lowest annual rise since August 2021, as a result of easing material supply conditions.
While the ABS noted that electricity prices rose 10.1 percent in the year to October, Mr Merrington said it could have been worse, if not for the introduction of the Energy Bill Relief Fund.
“Electricity prices have risen 8.4 per cent since June 2023. Excluding the rebates, Electricity prices would have increased 18.8 per cent over this period,” Mr Merrington said.
The inflation figures come ahead of the final meeting for the year of the RBA Board next Tuesday. The board raised the cash rate by 25 basis points at the November meeting following an increase in the rate of inflation in September.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
