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RBA’s March 2017 meeting yields no movement

RBA march 2017 news image

The Reserve Bank has again left the official cash rate on hold, but there are rumblings of a rate hike in the future.

The Reserve Bank decided at its board meeting today to leave the official cash rate untouched at 1.50%. The decision fell in line with economists’ expectations.

All experts polled in the monthly Reserve Bank survey correctly called the cash rate hold.

CoreLogic research head Tim Lawless said high house prices presented a predicament for the board.

“The predicament for the RBA is clear, they are unwilling to drop rates because this would likely add further fuel to the housing market; they don’t want to push rates higher as this will stifle consumption and investment more broadly as well as potentially place upwards pressure on the Australian dollar. While interest rates remain at a low level, and in the absence of additional macro prudential measures, we should expect housing demand from investors and owner occupiers to remain strong, particularly in those cities where economic conditions remain strong and migration rates remain high,” Lawless said.

However, the RBA is expected to begin raising rates in the future. With the US Federal Reserve tipping a March rate hike in its recent public comments, the Reserve Bank is anticipated to follow suit. Experts surveyed by agreed, with 68% predicting the next move by the RBA would be upwards.

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