It has been an entire year since changes to domestic interest rates, with the RBA once again holding it steady for the month of September.
In fact, most economists believe rates will not change at all for the remainder of 2014, particularly in light of the flat inflation figures released this week.
Overall, prices for Goods and Services remained relatively fixed throughout August, with slight price increases across fruit and vegetables, books, stationary and newspapers, offset by reduced health costs and petrol prices.
Interest rates steady for the rest of the year
Whilst no rate increase is predicted for the remainder of the year, neither is a rate cut.
According to ANZ chief economist Shane Oliver, a lot would have to go wrong in the economy before a rate cut would occur, including renewed weakness, poor unemployment and hiking inflation.
“The RBA is on the lookout for these things. There’s been a tentative recovery in the jobs market but if this vanishes, it could provide the catalyst for a rate cut, but I think it’s unlikely,” he said.
RBA Governor Glenn Stevens acknowledged that whilst low interest rates have been positive news for those looking to borrow, such as first homebuyers and investors, they haven’t been as pleasant for those with money tucked away in the bank.
“Right now savers are feeling the pinch of very low rates of interest on the safe assets that they hold and they’re feeling prompted to accept, in many cases, a little bit more risk to get the return they’re seeking,” he said.
Global economic factors and international relations will also play a part in any fluctuations we see in the interest rate, however the consensus regarding these elements also seems to support no expected changes until next year.
If you’ve been thinking about downsizing, upsizing or investing, with interest rates staying low, perhaps now is the time to look at your options. As always, we’re here to share our expertise with you, so give us an obligation-free call.