RBA announces cash rate call

by Julia Corderoy04 Aug 2015
The Reserve Bank of Australia has left the cash rate on hold at 2% for the third consecutive month since dropping it by 25 basis points in May.

Mortgage Choice CEO John Flavell says robust business confidence encouraged the RBA to leave the cash rate untouched, despite inflation figures coming in below the central bank’s 2-3% target range.

“Data from National Australia Bank shows business conditions and confidence have benefited from the  tax measures targeted at micro businesses in the Federal Budget, with conditions and confidence both rising by 2 points respectively,” he said.

“And it is not just small to medium sized enterprises that are enjoying a renewed sense of optimism, with the data showing positive momentum is broadening across all sectors and businesses. Confidence is now positive for all industries outside of the mining sector, which is something the Reserve Bank would be acutely aware of.”

The over-active property markets in Sydney and Melbourne would have also persuaded the Reserve Bank to leave the cash rate on hold, says Flavell, to avoid stimulating demand for housing further.