The Reserve Bank of Australia (RBA) has decided to keep its cash rate unchanged at an historicallow of 2.5 per cent in its October meeting.
The move was unamimously anticipated by analysts with a broad view that rates won’t rise until 2015.
RBA governor Glenn Stevens says growth in the global economy continues at a moderate pace with China growth showing some signs of slowing in recent months.
Volatility in some financial markets has picked up however long term interest rates and risk spreads remain low.
Mr Stevens noted while forward indicators ofemployment have been firming the labour market maintains a degree of spare capacity that will remain for some time yet. Growth in wages has declined noticeably which should help keep inflation within target.
The central bank re-asserts that monetary policy remains accommodative with credit growth moderate however investor growth has picked up in recent months along with increasing house prices.
Mr Stevens reflected the exchange rate remains has declined against the strengthening US dollar and inflation is expected to be consistent within the 2-3 per cent target for the next two year.
Prior to today’s announcement - FNN spoke toTim Lawless from RP Data about what will drive the housing market for the rest of 2014.
Well the housing market has been driven by very low interest rates for the past fourteen months now, and we are expecting values will rise higher with the fact that interest rates are remaining low, particularly on the basis that investor demand is really increasing across the Sydney and Melbourne housing markets.
