RBA shocks in rate announcement

by Adam Smith07 May 2013

The RBA has surprised today in its rate announcement.

The Reserve Bank bucked expectations in cutting the official cash rate 25bps to 2.75%. An AAP survey of 13 economists found none expected the RBA to move on rates today, but RP Data research director Tim Lawless said the decision may have been partly due to weakness in home building.
"What may have been most concerning to the RBA is the pace of dwelling construction and consumer appetite for newly constructed homes. Dwelling approvals and commencements remains weak and although new home sales have improved, according to the HIA, the number sold remains historically low.  If we are to see the construction sector pick up where the mining boom is leaving off, lower interest rates may be the catalyst that is required," Lawless said.


  • by Blake 7/05/2013 2:56:41 PM

    I just won a case of beer

  • by Melb broker 7/05/2013 2:57:09 PM

    Not really a shock. Probably overdue in my opinion

  • by Ian Graham 7/05/2013 3:18:39 PM

    Once again the RBA has shown just how out of touch most economists are.

    Any semi intelligent being who has got out of his/her ivory tower and talked to small business people, mortgage brokers and builders would have had no trouble correctly predicting this drop in rates.

    The good news is it will lead to cheaper mortgage rates but I suspect the stimulus intended may not be as good as expected, my measuring of feeling out on the street is that once again mortgage holders will choose to increase repayments rather than spend.

    This rate fall is really very sad, it just goes to show the parlous state of the economy.