Another month and another announcement from the Reserve Bank on interest rates. At this month’s meeting the RBA has decided to leave rates on hold for another month given that inflation rates have been contained within the comfort zone. Some economists are still saying that they expect rates may still move up further this year but many are also saying that they do not expect any more movements for 2010.
How the inflation rate and the world’s economies perform over the next quarter will have the biggest bearing on what happens. In reality without these figures everyone is really only guessing.
I think that another quarter percent rise this year is still a possibility and beyond that it is simply too hard to tell. It seems daily however the world is largely recovering from the GFC with Australia in a better position than most. However, we are still in fragile economic times and although we might be in recovery it would not take much to make world markets nervous. Another large financial institution going under or another European country getting into financial trouble could set optimism back a little. When it comes down to it, that overall optimism or sentiment in the market has the biggest bearing on what happens in the real world.
The way it is looking we have entered a more stable interest rate cycle and it at least looks as if the sharp and fast rises that happened just a few months ago has had the effect the RBA looked for. It has also put them into a position of being able to lower rates to stimulate the economy should the worst happen.
The housing market continues to be strong for quality in demand properties but has stabilized over the last 3 months and looks like it too has gone into a more secure long term growth pattern in most areas rather than a boom and bust cycle.
All in all a good and stable month for those with a mortgage and those looking to take one out. Hopefully we will stay on this type of cycle well into the future with good but sustainable growth and inflation all round.
The link below is to the RBA website if you would like to have a look at this month’s announcement.
Until next month keep well.
RBA Website Link
