The Reserve Bank of Australia (RBA
) has left the cash rate on hold at 2% in its last monetary policy meeting for 2015.
chief executive, John Flavell, said better than expected consumer confidence was likely to have pleased the central bank.
“According to the Westpac Melbourne Institute Index of Consumer Sentiment, confidence rose by 3.9% in November, which is a cracking result,” Flavell said.
“To put this confidence boost in perspective, the Consumer Sentiment Index is now sitting at a level we haven’t really seen since January 2015. Further, the Index is 8.3% higher than in September and marks the third month in the last 21 where optimists outnumber pessimists.”
According to Flavell, the RBA wouldn’t have wanted to jeopardise such strong gains in consumer sentiment by cutting rates heading into the festive season.
Combined with positive consumer sentiment, Flavell also added that an easing property market would have left the RBA comfortable with keeping rates on hold to finish the 2015 year.
“Data from CoreLogic
RP Data shows the housing market continues to see an easing in the rate of capital growth, with new research showing dwelling values actually fell across five of the eight capital cities in November, taking the combined capitals index 1.5% lower,” Flavell said.
“Across the capital cities, Melbourne recorded the biggest drop, with values falling 3.5% over the course of the month. Meanwhile, in Sydney, property prices fell 1.4% over the course of the month. This data makes it clear that Australia’s two hottest property markets have officially started to cool.”