Despite Glenn Stevens providing a hint of doubt, the result of today’s Reserve Bank meeting was close, however in line with most individuals predictions for the market – they have keep rates ON HOLD leading into the busy Christmas period.
The main contributing factor to this decision was the rise in the consumer price index of 1.2% over the last three months. This increase rose three times faster than the last increase in the June quarter and is the quickest rise in a single quarter for almost five years. These figures look promising for consumer confidence, with the Christmas period historically delivering increased sales to the retail sector which should also provide figures that indicate prosperity in the economy.
The announcement next month however, may be a more interesting decision. Given the conditions of the US economy, the rising dollar and the expected rise in unemployment – it will be interesting to see if Christmas and New Year spending is enough to boost the economy into February or if the RBA will have to act based on these growing economic concerns.
Furthermore, the recent decision by the Abbott government to increase the debt ceiling to $500 billion may indicate that these concerns are well founded and that further stimulatory action may be required early next year to abate some of these issues.
As such, it’s important for you to stay updated by contuniing to read these economic updates. And for those punters out there, good luck in the race today – we hope you back a winner!
To see how your current rate stacks up against the competition, speak to a Home Loan expert here.
Until next time…
The Rates Direct Team
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