RBA Rates Announcement April 2019 – same same, but different

Although today’s RBA announcement was that the official cash
rate would remain unchanged at 1.5%, it doesn’t mean things aren’t changing.

The longest run of unchanged rates on record (32 months and
counting) may be coming to an end soon, well soonish.

RBA Governor Philip Lowe’s monthly statements are notable
for their consistency. The all-important final paragraph provides an insight
into how the RBA think the markets will perform in the future.

Today there was a subtle shift in tone where the RBA said it
was appropriate to hold the monetary policy unchanged at this meeting but that
they would “continue to monitor developments and set monetary policy to support
growth”. In other words, the RBA are suggesting that there is now room for a
rate change some time in the future.

Given the current state of the economy, it would be a little
pre-emptive of the RBA to change its course now. Credit conditions have
tightened somewhat for investors but the general outlook for the economy
remains ‘reasonable’.

With a federal election on the horizon, it is also unlikely
the RBA will change course right now. 
They will essentially wait and see and probably won’t move on rates
until they have to.

Most economists think that that the RBA are gearing up for a
rate cut, or possibly two, but not until later in the year. For the moment
though, with the unemployment rate at 4.9% and job vacancies up, the RBA
message of low interest rates supporting the economy continues to hold.

The house price correction, particularly in the major
cities, may be a factor in determining if or when the RBA drop the cash rate.
The tightening credit conditions mean that property investors may find it hard
to refinance interest only loans as they mature.

In fact, the housing market is shifting in favour of
first-home buyers who are getting a much better look in in the market.  There is still a lot of competition for high
quality credit, so first-home buyers with good credit rating and a decent
deposit should shop around before deciding on a lender. Contact us today and let us
help you get the best possible deal for you.