Cash rate remains unchanged

2.10.13bThe Australian official cash rate has remained unchanged following a meeting of the Board of the Reserve Bank of Australia (RBA).

RBA Governor Glenn Stevens made the announcement today (March 4), after the board elected to leave the cash rate at 2.5 per cent.

The announcement will sit favourably with home buyers and investors looking to secure credit to buy property in Sydney, which has seen strong capital growth over the last year.

Predictions for Australian economy

The RBA has predicted “slightly firmer consumer demand,” which will help drive economic growth nationwide.

A “solid expansion in housing construction” is also expected, which will be well received by those Sydney seeking property, given the pressure on housing stocks.

Mr Stevens noted that dwelling prices have risen significantly over the past 12 months, however the lower interest rate may help buffer the impact on home buyers.

Ongoing stability in interest rates is also expected, according to Mr Stevens. If the rate remains at 2.5 per cent over the year, this is not only favourable for borrowing but also provides those with home mortgages a greater sense of consistency.

Mr Stevens also pointed out that inflation is expected to stay in line with the RBA’s target of 2 to 3 per cent over the next two years.

Valuable industry comment

The 2.5 per cent cash rate is expected to remain consistent for some time and today’s decision was largely expected by property and financial industry leaders.

“As largely anticipated, interest rates remain at an historic low of 2.5 per cent,” announced Real Estate Institute of New South Wales President Malcolm Gunning.

Mr Gunning suggested abolishing stamp duty to further incentivise the purchase of property.

However, he looked favourably upon the cash rate decision overall, noting that “the stability of property as an investment, coupled with the record low interest rates, means that it is considered highly attractive compared to other investments, especially shares.”

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