RBA leaves cash rate unchanged

by BN04 Aug 2009

For the fourth consecutive month the RBA has left the headline cash rate at 3%.

In a statement following the announcement, RBA governer Glenn Stevens said the global economy was stabilising "after an earlier sharp contraction in demand".

"Downside risks to the global outlook have diminished, though they have not disappeared and most observers expect only modest growth overall," he added.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard said she hoped that the cash rate remaining steady for a fourth consecutive month did not lull Australians into a false sense of security.
“The cash rate will not stay at the current half century low forever, and lenders are moving interest rates regardless. We have been watching this happen over the past three or so months,” she said.

"Borrowers must be prepared now for a rise in their minimum mortgage repayment level. It is not a matter of if, it’s a matter of when. The market is currently pricing in a 100 percentage point cash rate rise by July 2010," she added.

The move was widely tipped by analysts and economists, though most are now predicting that the next move will be upwards.

The last time the RBA cut the cash rate was in April, when it fell by 25bps from 3.25% to 3%.

JP Morgan predicted a move upwards would not be until the middle of next year while Commsec chief economist Craig James said the economy was improving across a wide range of sectors, but it was too early to put up interest rates, the ABC reported.

While the RBA left rates on hold, today saw Westpac push up fixed rates due to increased funding costs.

Westpac's one-year fixed home loan rate went up by 10bps to 5.59%, its three-year fixed rate increased by 40bps to 6.99% while its five-year rate increased by 45bps to 7.64%.

Related stories:

Housing credit nearly 1% up: RBA - Housing credit increased 0.6% over June, following a similar increase a month earlier, according to RBA stats released for June. Over the year to June it was up 7.1%.


  • by Yugesh Chand 4/08/2009 4:52:45 PM

    Whilst the RBA rate is lowest to 3% and the board to leave the rate as it is has got us thinking that should we now fix rates on mortgages for 3, 5 years as the banks are moving 5 these rates up and leaving variable very attractive. We consumers are left very vulnerable to this and is there any suggestion what would be ideal in these circumstances?

  • by Tony Safoulis 4/08/2009 5:51:30 PM

    Did you notice WBC and CBA wrote almost 80% of the volume in June. There you go says it all. WBC are a remarkable brand getting stronger too.

  • by David 4/08/2009 6:03:55 PM

    That's the way. Keep stealing money from the people who save and are wanting to get in the housing market by saving the asses of people that should never have got loans in the first place while also increasing the house price in the medium term.