Tuesday, 5 July 2011

Reserve Bank of Australia again spares homeowners


Reserve Bank of Australia again spares homeowners

GraphsHomeowners have again dodged an interest rate hike, with the Reserve Bank of Australia (RBA) leaving the cash rate unchanged at its board meeting today.
Cash has been at 4.75 per cent since November 2010, when the RBA lifted it from 4.5 per cent, citing a risk inflation would rise over the medium term thanks to a lack of spare productive capacity and the boost to the economy from the resources boom.
Today’s decision was somewhat predicted, most financial markets saw just a little over a 10 per cent chance of a rise.
The central bank has previously warned that the cash rate will have to rise ``at some point'' because of potential inflation pressures from a record terms of trade and a massive business investment pipeline as a result of mining growth.
While today provided some more breathing room for homeowners, a rise seems inevitable and could come as soon as next month, with a further rise also predicted prior to Christmas.