Perth, WA - The RBA confirmed in its November board meeting earlier this week that the cash rate remains unchanged at 2.5 per cent.
This represents the 15th consecutive month that rates have stayed the same since August 2013. The news was completely expected as most economists believe the rates will remain unchanged until next year.
"In the board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target," Governor Glenn Stevens said in a statement after the meeting concluded. "On present indications, the most prudent course is likely to be a period of stability in interest rates."
This period of stability has proven to be much longer than previously anticipated.
Despite volatility in some financial markets, the monetary policy continues to remain accommodative. Rates are still at their lowest in years as dwelling prices across major capital cities continue to increase. The RBA said that monetary policy should help strengthen growth over time.
Inflation is expected to be consistent with the 2 to 3 per cent target over the next several years. The monetary policy has been appropriately set to foster growth in line with the target. This is part of the reason why the board continues to leave rates unchanged.
Some economists have indicated that these decisions could be creating risks in the housing market.
Data from the RP Data Home Value Index showed strong year on year growth (8.93 per cent average) across five major capital cities. Driving part of this part is strong demand from investors. Instead of pushing rates higher, the APRA and RBA may choose instead to make changes to lending criteria to investors.
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