The Reserve Bank of Australia’s (RBA) decision to hold the cash rate steady at 1.0% this month has been widely welcomed across the industry.
Mortgage Choice CEO Susan Mitchell called the decision “prudent.”
“A third cut so soon after two consecutive cuts in June and July would not have given policymakers enough time to see if the cuts had any marked effect on the economy,” she said.
According to the CEO, the unemployment rate remaining steady at 5.2% likely played into the decision to hold the official rate for the time being.
However, Mitchell also noted that while recent data has shown national dwelling values are stabilising, consumer outlook has continued to decline.
“The Westpac Melbourne Institute of Consumer Sentiment revealed that consumer sentiment deteriorated in July, as concerns over the economy continue to weigh heavily,” said Mitchell.
“The inflation rate came in under the RBA’s expectations once more, with June quarter figures revealing a…percentage change of 1.6%, well below the RBA’s target range of 2-3%.”
Managing director of Finsure John Kolenda, also welcomed the decision to maintain the 1.0% rate.
“The RBA should keep its powder dry and save future rate reductions for any further deterioration in the economy,” he said.
“The central bank needs to leave some fuel in the tank for potentially more headwinds, although it’s encouraging to see some positive signs in the economy coming through.”
Additionally, Kolenda reiterated that cutting the cash rate is just one of a variety of tools that can be used to stimulate the economy.
“For the time being, the RBA can apply the handbrake on rates and see what impact income tax cuts, infrastructure spending and the stabilisation of house prices has on consumer confidence,” he said.