RBA keeps cash rate on hold – but where to from here?

This Tuesday the Reserve Bank of Australia has announced the result of its monthly board meeting.interest rates

The official cash rate has been left at a record-low 2.00 per cent, as most experts had forecast.

All 12 economists surveyed by AAP expected the cash rate to remain steady on Tuesday, with nine of them tipping no move this year.

The consensus view was that it was too soon for the board to move again on rates after making cuts in February and May.

The feeling is that the board will want several months to assess the impact of the earlier decisions.

Low inflation and the high Australian dollar are reasons why the Reserve Bank might further reduce rates in 2015.

However, one reason not to do so would be to avoid further inflating property prices in Sydney and Melbourne. Similarly, the OECD has issued a statement in favour of the RBA limiting any further rate drops.

d887f522-dea3-4e60-bdb9-ea6359fbc227Westpac chief economist Bill Evans said the cash rate was unlikely to fall further.

“The Reserve Bank will now take time to assess the sustainability of their current forecast that economic growth in 2016 will exceed 3 per cent,” he said.

“For our part, the next significant date will be the November board meeting.”

According to a survey conducted by online comparison site Finder, 23 of the 34 economists surveyed expect the cash rate to start rising in 2016.

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