RBA Cash Rate Target Announcement – November 2014

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The RBA holds the cash rate at 2.50% for the month of November.

In a move many predicted, the Reserve Bank of Australia today held cash rates at 2.50% for the month of November.’

The move was correctly predicted by each of the 33 expert commentators in the Australia’s largest Reserve Bank cash rate survey conducted by finder.com.au.

The ASX Rate Indicator gave the chance of the RBA holding at 98%, with only a 2% of rates being cut.

The move was expected by many of the economists on the finder.com.au survey, with 69% expecting rates to rise between July and September of 2015.

Scott Morgan, CEO of Greater Building Society, said the RBA’s decision not to cut rates further was a response to inflation, and that rates would rise next year to combat risks associated with a build up in asset prices.

“The RBA has indicated a period of stability in rates and I do not see that changing in the immediate term,” he said.

“Weaker inflation has made a cut in rates even less likely than in previous months. The RBA is cognisant to a potential build-up in asset prices and the flow on risks that causes. Therefore, there is scope for rate increases inside the next nine months supported by these risks, a possible upward move in US rates (which will continue to cause a reduction in the Australian dollar) and improving economic indicators in the Australian Economy around GDP, unemployment and retail sales.”

AAP Economist Garry Shilson Josling, said the RBA has to walk a fine line between the housing market and the wider economy.

“The housing market's too strong to allow a cut but the rest of the economy is too soft to cope with an increase. If macroprudential policies to cool the investor segment of the housing market work – and there's no good reason to suppose they won't – the RBA should be under no real pressure to jack rates up in a hurry,” he said.

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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