Sometimes, no news is good news. So, while many economists predict the next move on interest rates will be up they also think that, for the foreseeable future, the board of the Reserve Bank of Australia will keep the cash rate at the record low of 1.50%.
A statement released by the RBA after last month’s decision says the global economy has strengthened over the past year, with advanced economies showing above-trend growth and low unemployment.
In Australia, the economy grew by 2.4% in 2017, with the RBA expecting faster growth this year. Positive business conditions, an increase in non-mining investment and higher levels of public infrastructure are also supporting the Australian economy.
Interest Rates and the Federal Budget
May is budget month. Treasurer Scott Morrison has been hinting that most Australians will be better off, saying now is the right time for income tax cuts.
So, as we all wait until next Tuesday to see how the budget will affect us and interest rates, take some comfort in this statement from Deloitte Access Economics regarding the most recent Federal Government tax collection windfall:
“The rivers of gold are running again, with the global and Australian economies doing the Budget plenty of favours “It’s an almost picture perfect backdrop for the taxman: not only are there more dollars in the economy than Treasury forecast, but companies and super funds have also increasingly run out of the losses they racked up during the GFC — meaning that good news on the economy is being turbocharged in terms of its effects on the tax take.”
While nobody knows exactly what the Treasurer will say, all the current indications suggest that most people have a reason to be optimistic. Stay tuned.
Meanwhile, if you have any questions about today’s interest rates announcement, please do not hesitate to your mortgage broker – we’re here to help.