- Rates steady in a mixed economy
- Unemployment up but other factors improving
- Housing markets rising on falling mortgage costs
The Reserve Bank has as expected decided to again leave official interest rates on hold at its second meeting for 2014. Rates have now been steady since the decision by the Bank in August last year to cut rates to a 60 year low of 2.5 percent.
Recent economic data however remains mixed with the Bank likely to remain on the sidelines until a clear trend in economic activity emerges – particularly in regard to unemployment.
The national seasonally-adjusted unemployment rate increased to 6 percent over January – the highest monthly rate since July 2003. Rising unemployment was however offset by recent increases in dwelling construction and retail sales together with a rising sharemarket and a positive export performance.
Although official rates remain on hold, mortgage interest rates and costs are falling as competition amongst banks for market share intensifies in a generally positive environment for home buyer activity in most housing markets.
Buyer activity in the Sydney weekend home auction market remains at record levels with the Melbourne auction market strengthening since last year.
“The Reserve Bank has as expected decided to leave interest rates on hold at its second meeting for 2014. Recent economic data remains mixed for interest rate policy with rising unemployment offset by improvements in a number of key areas of economic activity. The Bank will also be aware of generally strengthening housing market activity, particularly in Sydney where prices growth has approached record levels.
Continuing rising unemployment will be the catalyst for any future cut in interest rates although as a lagging indicator of overall economic activity the Bank will nonetheless be more positive about the prospects of an improvement in the general economy over the medium-term.”, says Dr Andrew Wilson Senior Economist for Australian Property Monitors.