Interest Rates May Stay Low For Several Years: RBA

The Reserve Bank of Australia recently entertained the possibility of keeping the interest rates at low levels for the next “couple of years” to aid the weak economy, provided that house prices are kept in check.

RBA governor Glenn Stevens is softening their outlook for 2015 due to weak employment data and believes that it will take several years before inflation triggers a rate increase. He also dismisses the idea that the nation is headed to a “bubble”, noting that high prices especially in Sydney and Melbourne are kept at bay by the low currency and interest rate.

Read more about this on the Financial Review website.

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Official Cash Rate On Hold At 2.5% Since 7 August 2013

Without causing much stir, the Reserve Bank has kept the Official Cash Rate at a record low of 2.5%, after holding their second – last monthly meeting of the year on Melbourne Cup day.

The cash rate has remained at these levels for the past 15 months and experts surveyed by Finder.com.au are unanimous in predicting that the rates would remain on hold. This period of stability will encourage high activity in the property market, as sellers would still have enough time to list before the expected market slowdown on Christmas.

Speculations on the next rate hike are divided, with Westpac expecting the increase to happen as late as August next year.

Read more about this on the Smart Property Investment website.

Record Low Interest Rates To Remain At 2.5% Until September 2015

The Reserve Bank has recently released a statement saying that the Official Cash Rate will remain at record low levels for about a year, after their decision to keep it at 2.5% in their September meeting, increasing the interest rate streak to 13 months.

The RBA cited the decrease of housing loans to 15 basis points as one of the major drivers in keeping the rates at 2.5%, and that forecasted property demand should taper off property price increases in the future. The RBA is also pleased with the current status of the mortgage market, saying that current policies and lending standards have met their expectations.

Read more about this on the Adviser website.

Interest Rates To Stay Low For A Long Time

The Reserve Bank released their June Board Meeting minutes with clear indications that the interest rate will remain at the current levels for a long time. The interest rate has been on hold at 2.5% for the ninth straight meeting, as the RBA is confident that the country’s inflation will remain at the 2 – 3% threshold.

The economy has gradually grown by 1.1% for the first quarter, extending the country’s impressive economy run to 90 quarters without a recession. Several factors may affect the current interest rate, and may even push for a rate cut, as wage growth remains soft at 2.6% and house prices have slowed in several areas. Keeping the interest rates low is good news for homeowners as mortgage repayments remain at affordable levels.

Read more about this on Pete Wargent’s Blog.