Rates on hold after March Reserve Bank meeting

Friday, June 21, 2019

The ‘on-hold’ strategy is in contrast to its decision last month to cut rates, but already there are calls to cut again.

Housing Industry Association senior economist Shane Garrett, said the decision will come as a disappointment to mortgage borrowers and small businesses who had been hoping for a second interest rate cut.

‘‘Many areas of domestic demand are struggling at this time, with business investment as yet failing to respond to low rates, and unemployment continuing to drift upwards,’’ Mr Garrett said.

‘‘There had been hopes that the RBA would reduce interest rates today in order to provide additional support.’’

‘‘The RBA has strongly hinted that rates may be lowered in the months ahead. Interest rates should be cut again in April in order to dispel any uncertainty,’’ he said.

Mortgage broker network 1300HomeLoan managing director John Kolenda said a sluggish domestic economy and global economic factors are still expected to see the RBA take official interest rates further into unchartered waters in coming months, even taking the cash rate below two per cent for the first time.

‘‘Central banks around the world, most notably China, have been moving their official interest rates south and the RBA will probably have to follow suit,’’ he said.

‘‘Mining investment in Australia remains in retreat and other sectors have not picked up the slack so more is likely to be needed to reinvigorate the domestic economy.