RBA Governor Phillip Lowe announces a hold to the official Cash Rate at 0.75%
Today’s RBA meeting marks the first of 2020: The official Cash Rate will be held at 0.75%. However, many experts are tipping the rate to drop within the next few months following the ongoing national and global pressures.
In a statement, Lowe expressed the RBA board is satisfied the current Cash Rate and monetary policy are gradually starting to stimulate the Australian economy and buyer confidence.
“Lower interest rates have assisted with the process of household balance sheet adjustment. They have also boosted asset prices, which in time should lead to increased spending, including on residential construction.” – Phillip Lowe, RBA Governor.
How are home loan interest rates affected?
It is expected that lenders will follow suit. Borrowers shouldn’t expect any significant drop in interest rates until the RBA decides to drop the Cash Rate.
Despite the hold, Reduce Home Loans General Manager, Josh Beitz, is confident that there’s never been a better time to refinance.
“With interest rates still this low, you’d have to be crazy to not have an interest rate lower than 3 per cent,” Beitz said. “On average, Reduce saves our clients $270 per month by offering variable owner occupier rates starting from 2.69 per cent.”
Economists tip for future Cash Rate drops
Only one in ten economists believed the Cash Rate would drop in today’s RBA announcement. Most citing the economic damage the Australian Bushfires have wrought; and now the impending impact of the deadly coronavirus spread.
Those economists who tipped a cut this February expected the RBA to move preemptively against these pressures, even though the full economic impact of both horrific events yet remains unquantified.
As a result of such pressures, analysts are looking toward the coming months’ RBA board decisions. The general consensus among economists is that the RBA will be forced to cut to a new low of 0.5% before Q3 2020.