Home owners with mortgages can breath a sigh of relief for one more month as the Reserve Bank today announced that interest rates remain on hold for the month of April.
In his usual statement explaining how the board came to their decision, the Governor, Glenn Stevens, noted briefly the events occuring globally and domestically.
On the global front:
- The board noted that global economies were continuing to grow led by the strong growth in Asia (bar Japan);
- The disaster in Japan will affect Japanese production in the near term, but impact on the broader Asian region will be limited; and
- A number of countries have begun tightening their monetary policy settings.
Domestically:
- Private investment (especially in the resources sector) is picking up;
- Households continue to be cautious about spending leading to higher rate of savings;
- Asset values have changed little;
- Unemployment remains steady at 5%; and
- Inflation remains witin the medium objectives of the Reserve Bank.
Whilst the Reserve Bank has indicated that inflation is likely to remain within the 2 – 3% target, the credit market is expecting a 0.25% increase in interest rates over the next 12 months. However, some analysts are tipping that there is a possibility that commercial banks will once again move out of sync with official interest rates.
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