The news this week that the Reserve Bank held interest rates for the 13th straight meeting came as no surprise. However, speculation of a rate rise among many experts continues as world economies increasingly indicate that a normalisation of monetary policies is beginning to unfold.
The RBA Board met on Tuesday and left the official cash rate at its historic low of 1.50 per cent. And whilst the Bank acknowledges that growth in housing debt has been outpacing the slow growth in household incomes for some time, it also recognises the regulatory measures introduced by APRA are taking effect, particularly in the Sydney market, which is showing signs of easing.
The RBA’s sentiment was backed up by Corelogic’s latest data which actually shows a fall – albeit of only 0.1 per cent - in Sydney house prices in September. This is the first time since late 2015 that Sydney saw a cooling in house price growth.
Although experts continue to predict that the RBA will join the global shift towards increasing rate settings as early as next year, there was no indication of this happening at the October meeting, with Governor Phillip Lowe reiterating that the low interest rate environment continues to support Australia’s economy.
Any cash rate rise would be the first hike since 2010, and in the event rates do begin to trend upwards the lift will be incremental and tightly controlled by the RBA.