The RBA has decided to keep interest rates at record low for the 25th consecutive month.
It stated that it is not concerned by rising home loan rates. “Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago”
The ASX cash rate futures market has had priced in a ‘no change’ and a the likelihood of a rate hike through to the end of 2019 is seen as almost non-existent.
The last time that the RBA cut rates was in August 2016 and the last rate rise was in November 2010.
The RBA has also downgraded its short-term inflation forecast to 1.75 per cent.
It remained upbeat about that economy and stated that GDP growth has been “above trend.”
This is despite the fact that household income has been growing slowly and that household debt levels are high. The drought has also led to difficult conditions in parts of the farm sector.
The RBA also did not express concern with some of the out-of-cycle rate rises emerging in the home lending sector.
“Money-market interest rates are higher than they were at the start of the year, although they have declined somewhat since the end of June,” Dr Lowe, the Governor of the RBA, said.
“Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago.”
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