RBA keeps cash rate on hold

Australia’s central bank kept interest rates at the historic low of 2.0 percent for a seventh month Tuesday, but indicated further easing could be in the pipeline.

Fed hikes will likely push the Australian dollar further downwards, from its current stubborn point around US72c, helping to offset fresh falls in commodity prices, in particular iron ore which has crashed to a fresh decade-low.

He tweaked his wording on the housing market.

He said, in Australia, available information suggested moderate expansion in the economy continued in the face of a large decline in capital spending in the mining sector.

However, business surveys show a gradual improvement in conditions in non-mining sectors over the past year, according to the RBA statement. The RBA maintains that the economy is traveling pretty well given the scale of the drop in mining investment, with the unemployment rate stabilizing at a little under 6 percent.

Combined with positive consumer sentiment, Flavell also added that an easing property market would have left the RBA comfortable with keeping rates on hold to finish the 2015 year.

THE Reserve Bank is chilling out on cutting the cash rate – at least until next year.

“Headline inflation, at 1.5 per cent (year-on-year) below the RBA’s target band of 2-3 per cent, remains well contained and GDP growth, at 2 per cent annualised, soft”, said the Shadow Board statement.

On the housing market, Stevens noted: “The pace of growth in dwelling prices has moderated in Melbourne and Sydney over recent months and has remained mostly subdued in other cities”.

But he said despite the stable setting and a spate of recent rate rises, mortgages rates remained close to record lows, which should continue to act as an incentive for home buyers and investors.

The RBA had held rates steady at 2.5 per cent for the 18 months following August 2013 until its February move, which it then followed with a subsequent cut in May.