As predicted the Reserve Bank of Australia has maintained it’s record low interest rate of 1%, with no change at this month’s board meeting.
The pause in cutting will allow time for RBA governor Philip Lowe time to see how the previous cuts will impact the economy. “It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target,” RBA governor Philip Lowe said in a post-meeting statement. “The board will continue to monitor developments in the labour market closely and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”
Despite the pause in cutting the expected move in the future would be a further rate cut based on the current economic environment, potentially bringing rates down to 0.75%.
Whilst the RBA considers another rate cut they have also called on the government to look at other ways to boost the economy. “As a country, we should also be looking at other ways to get closer to full employment. One option is fiscal policy, including through spending on infrastructure,” Dr Lowe said in June. “Another is structural policies that support firms expanding, investing, innovating and employing people. Both of these options need to be kept in mind as the various arms of public policy seek to maximise the economic prosperity of the people of Australia.”
The Coalition government in July passed its controversial tax cut package which is designed to stimulate the economy. Social advocacy group, Australian Council of Social Service (ACOSS) has also proposed that an increase to the minimum wage and Newstart allowance would strengthen the economy and reduce poverty.
The Reserve Bank will hold its next board meeting on Tuesday 3 September.
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By Wendy Chamberlain
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With a passion for all things real estate spanning over 20 years, Wendy loves that her role as a Buyers Agent and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.chamberlainadvocates.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.
