The RBA has left its official cash rate at 1.5%

The Reserve Bank has left interest rates on hold at 1.5 per cent for another month.

The RBA has now kept rates steady since August last year, amid ongoing deterioration of the unemployment rate around the country.

The lack of movement in interest rates is fundamentally the result of the RBA being torn between a surging housing market and the sluggish economy.

The hot housing markets in Melbourne and Sydney are making it all but impossible for the central bank to cut rates again, while at the same time they can’t raise rates to deflate the apparent housing bubble because of the effect it would have on economic growth.

RBA governor Philip Lowe was spruiking his support for recent APRA lending crackdowns to stem the housing market growth in his post-meeting statement.

“Growth in household borrowing, largely to purchase housing, continues to outpace growth in household income,” he said.

“By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness.”

“Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions.”

“A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.”

While the RBA has kept rates on hold, borrowers can expect banks to continue to lift their own rates, especially for investors, over the coming months.’s Graham Cooke told the out-of-cycle interest rate hikes from banks could be a blessing in disguise.

“While recent independent rate rises have been unpopular with homeowners, it’s likely the banks have given the RBA breathing space to hold out longer before making a move,” he said.

“It’s likely that some time will lapse before the Reserve Bank increases the cash rate after banks have taken matters into their own hands.”

“We’re expecting the Reserve Bank to stay in its wait-and-see mode for the foreseeable future.”


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