There was no interest rate rise at the August meeting of the Reserve Bank: and snap, same again this week, again the cash rate has remained at 4.50 per cent after the Reserve Bank board got together for their first Tuesday in September meeting.
The reason why is pretty neatly summed up by the RBA governor, Glenn Stevens, himself, in the monthly media release that follows the Reserve Bank meetings:
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. With growth in the near term likely to be close to trend, inflation close to target and with the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate for the time being.
In other words, the economy is moving along pretty well as one might hope and expect, so “if it ain’t broke, don’t fix it”.
Given that the new government was only announced around the same time as the Reserve Bank met, we will have to wait until the October meeting to find out if the political direction of the country will have any influence on the cash rate policy.
In the meantime, there was talk even before the Reserve Bank board meeting that major banks, in particular the Commonwealth Bank, may very well raise their mortgage rates even with a Reserve Bank “hold”, but as yet there have been none of those dreaded announcements. However other banks note that home lending is still down compared to average figures, despite a small increase in recently released statistics, which means holding interest rates as they are is the more likely way to stimulate more mortgage business. We may have to wait the week out to see which of these suggestions is more accurate and whether any banks increase their home loan interest rates on us.