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The Reserve Bank of Australia has announced the outcome of its monthly board meeting.
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RBA rate announcement - August 2014
05 August 2014
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The official cash rate was left at a record-low 2.5 per cent for the 12th consecutive month, as most experts had forecast.
All 15 economists surveyed by AAP had expected the cash rate to remain on hold as had all 21 economists surveyed by comparison website finder.com.au.
AMP Capital chief economist Shane Oliver told finder.com.au that not enough had happened since the July meeting to convince the Reserve Bank to change the cash rate.
“The economic data has been somewhat mixed. There have been good housing indicators, some solidness in retail sales, but nothing dramatic, and certainly not enough to signal a change,” he said.
ANZ chief economist Warren Hogan said the economy had been playing out as expected, with an increase in non-mining investment offsetting a downturn in mining investment.
“The higher Australian dollar is acting as modest constraint on the economy. Housing continues to do well but without signs of excessive credit growth,” he said.
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Westpac chief economist Bill Evans told finder.com.au that the Reserve Bank was waiting for some sort of change in the economy before committing to any policy option.
“Despite market pricing now pointing to a rate cut over the next six months there's no evidence in the minutes to indicate that the board is seriously considering this option,” he said.
The Reserve Bank forecast last month that the cash rate would remain at 2.5 per cent for at least one more year.
The consensus among the economists surveyed by finder.com.au is that the Reserve Bank will move some time in 2015, with the cash rate tipped to eventually rise to 4 per cent.
Mortgage Choice said the Reserve Bank was unlikely to change the cash rate in the immediate future.
“Given the fact that the Australian economy and property market is currently performing well, we wouldn’t be surprised to see the Reserve Bank to leave the official cash rate on hold for another few months at least,” spokesperson Jessica Darnbrough said.
LJ Hooker chief executive Grant Harrod said there had been some speculation that the next move in the cash rate might be downwards if the Australian dollar remained high.
“It now looks likely interest rates will remain on hold for the rest of the year, barring any unforeseen events and it should boost consumer confidence as we approach spring,” he said.
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