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RBA stays put for July 2017 cash rate meeting


Australian currency

The Reserve Bank has left the cash rate on hold at its July 2017 meeting, but signs point to a rate hike in the future.

The RBA board has again left the official cash rate untouched at 1.50%. The result was correctly predicted by 100% of the experts polled in the Monthly RBA Survey.

The vast majority of experts surveyed (88%) predicted the RBA’s next move would be a rate rise, while 12% believe the Reserve Bank could deal another cut.

Should the Reserve Bank return to a tightening bias, the majority of experts believe consumers can expect fewer than two rate increases in 2018. Only three respondents to the survey believe the RBA will raise rates two or more times in 2018.

The forecast stands in stark contrast to comments from former RBA board member John Edwards, who has predicted eight rate rises over the next two years.

Federal Reserve Bank of San Francisco president John Williams warned in a speech this week that rate hikes could be “very costly” to the Australian economy.

Lenders, meanwhile, have continued to move independently of the RBA. In recent weeks, three of the four major banks have raised rates for interest-only borrowers while dealing cuts to principal and interest borrowers. The banks have claimed the moves come in response to APRA’s crackdown on interest-only lending, and are not a reaction to the Federal Government’s major bank levy.

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