RBA to keep rates low for at least 3 years
At today’s board meeting, the Reserve Bank decided to hold the official cash rate at 0.10% or 10 basis points. Some economists were speculating about another cut, but holding the rate was a commonly held view. The biggest news from today’s statement was the fact that the RBA stated that it doesn’t expect to increase the cash rate for at least 3 years. This means the low cost of borrowing money will be something we can all take to the bank (so to speak).
Governor Lowe said that the decision to hold the rates at 0.10% was due to the mixed bag of global news. Inflation is on the rise in Europe and the United States and the economic recovery has stalled in both countries. On the other hand, there is positive news about vaccines and this has boosted the outlook for a global economic and social recovery from Covid-19.
Either way, the economic recovery in Australia is likely to be ‘uneven’ and ‘drawn out’ requiring ongoing fiscal stimulus from the Government.
Unemployment is high and likely to go higher. This is one of the major concerns of the RBA and until it falls to an acceptable level, the official interest rate will remain low.
For homeowners, property investors and particularly first home-buyers there is plenty of good news. Low interest rates makes borrowing money more affordable and the recent Victorian state budget provides great stamp duty discounts for new builds. Consumers can expect low interest rates from their lenders. If you’re not sure you are getting a fair deal, speak to us. We’ll review your situation and will work out the best deal for you.
So as 2020 wraps up, we can be cheered not only by the positive vaccines news but also by the fact that we can enjoy the festive season safe and together with our loved ones. Stay safe and here’s hoping 2021 is a better year for everyone.