RBA May meeting: rates on hold at 0.1% as inflation fails to rise
At today’s board meeting the Reserve Bank decided to maintain the official cash rate at 0.1% as well as keeping the yield on 3-year government bonds.
Today’s statement noted that many economies were beginning to recover from the pandemic but that the global recovery was ‘uneven’. Here in Australia, there are good signs that the economy is beginning to recovery from the shock of the pandemic despite the uncertainty over the vaccine roll out and the continued rise of cases worldwide.
The employment rate is almost back to pre-pandemic levels although wages growth remains stagnant. Until wages rise in real terms, it’s unlikely that inflation will meet the RBA’s desired levels. And until this happens, the official cash rate won’t rise.
On the home front, there’s been a rise in rental prices across the country as pandemic-imposed rental controls are lifted. This is particularly noticeable in satellite cities surrounding our main capital cities as people shift away from the CBD and suburbs.
House prices have also seen a great boost this year across the country. Even Darwin has recovered a lot of lost ground, First-home buyers and owner-occupiers are the main groups leading the charge in the housing market, but investors are slowly returning to the market. A lifting of covid restrictions is making things a lot easier in the real estate market with auctions and open-for-inspections now possible.
Despite the almost certainty of low interest rates for a while yet, the housing market price rises are expected to stabilise. The RBA made clear that it will be monitoring the situation in case lending controls are required. It remains a great market for anyone looking to upsize or downsize and there are still opportunities for first home buyers. To get a home loan health check or to review your home loan options, contact us and we’ll make sure you get the best deal for you.
In an unpredictable world, today’s announcement was pleasingly predictable and there’s also a lovely certainty to the RBA’s final statement that rates are unlikely to rise until 2024 “at the earliest”.