RBA leaves cash rate on hold at February 2018 meeting

Adam Smith 6 February 2018 NEWS

house calendar1The Reserve Bank has again left the cash rate on hold at 1.50%.

At its first board meeting of the year, the RBA has chosen to leave the official cash rate untouched.

The result was largely expected. One hundred per cent of the experts polled in the monthly finder.com.au Reserve Bank Survey correctly predicted the hold.

CoreLogic research head Tim Lawless said inflation figures and a cooling housing market left the Reserve Bank little reason to move the official cash rate.

"According to CoreLogic’s’ hedonic indices, the heat has come out of the Australian housing market, with national dwelling values falling by 0.7% since peaking in September last year. Falling dwelling values are the result of tighter credit conditions rather than any changes in monetary policy settings. Despite the stable cash rate, investors have seen an average 40 basis points increase in their mortgage rates due to higher capital requirements from lenders, which has helped to slow investment demand and quell rapidly rising home values," Lawless said.

But Lawless predicted the RBA's next move would be upwards.

"Interest rates won’t stay at their record lows forever. Financial markets have fully priced a 25 basis point rise by February next year. In the meantime, we expect housing market demand to be supported by low mortgage rates and high rates of population growth, despite the easing in capital growth rates that have been most evident in Sydney and, to a lesser extent, Melbourne dwellings," he said.

Need a home loan? Start comparing your options

Latest home loans headlines

Image: Shutterstock

Get more from finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.
Ask a question
Go to site