There have been speculations whether or not the RBA (Reserve Bank of Australia) would cut interest rates once again to boost Christmas sales. The speculations have already been cleared as the RBA has already decided. The RBA Has Announced Their Official Cash Rate In Time For Christmas during its last meeting of the year held on Tuesday (December 2, 2019) to hold official interest rates steady as it waits to see if the economy closes out 2019 on a positive note.
The bank decided to hold the official cash rate at a record low of 0.75% in line with the financial market and economist expectations.
The market has already expected that the RBA to let its rates steady with the prediction that the bank would wait to see how the Christmas and New Year spending activity will affect the economy, before making another decision early next year. This just explains that there are still open possibilities for future cuts if the low cost of borrowing and tax cuts fail to stimulate the economy.
RBA Governor Philip Lowe has stated, “Outlook for the global economy remains reasonable”, adding that “while the risks are still tilted to the downside, some of these risks have lessened recently”.
“Given these effects of lower interest rates and the long and variable lags in the transmission of monetary policy, the board decided to hold the cash rate steady at this meeting while it continues to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time,”
“The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending,” he added.
He also noted that “The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices and a brighter outlook for the resources sector should all support growth.”
Property prices and investors appear to have been the biggest beneficiaries of the RBA’s 0.25% interest rate reductions in June, July, and October.