Nothing drastic happened in March to stir the Australian economy, so it was no surprise the Reserve Bank of Australia retained its neutral stance – the official cash rate remains at a record low 1.50%pa. The last movement on interest rates was in August 2016, and experts predict that it may well stay where it is for the foreseeable future.
This information is important to you because it helps you plan your finances. But, have you ever wondered what the RBA actually do at the monthly meetings and the factors they consider when making their interest rates decision?
In short, it is the job of the RBA to ensure the cost of living remains at a reasonable rate for Australians. The board also attempts to keep inflation between 2 and 3% (the good news being they have succeeded for many years now).
Decision on Interest Rates
Before coming to any resolution, the board members take into consideration current full time employment figures; consumer and business confidence; the stability of the Australian dollar and household debt.
They will also study overseas housing markets, currencies and consumer demand. The economic and trade conditions of the US, China and major European countries also come into play.
So, when the members meet on the first Tuesday of every month (except for January), they share pleasantries and sandwiches, read reports on national and international economic information and watch presentations from experts. Only after taking all these aspects into account will they agree on their verdict.
Then, a media release is prepared and economic journalists, traders, banking authorities and keen observers keep an eye on the RBA website, which makes the information live at precisely 2:30pm.
So, while interest rates remain stable, opportunities still abound for homeowners and investors. If you’re considering your options – an investment property, a mortgage health check or a lender change – it’s the perfect time. As always, we’re here to help with all that and more – give us a call anytime.