Re­serve Bank holds rates but doesn’t rule out a fu­ture cut

Pilbara News - - Resources - Shane Wright

■ The Re­serve Bank has given it­self room to cut in­ter­est rates, de­spite hold­ing them steady at 2 per cent for the sixth con­sec­u­tive month last week.

Mar­kets had put the chance of a rate cut at 50-50, in part be­cause of the big four lenders lift­ing their mort­gage rates and fig­ures show­ing in­fla­tion edg­ing down to very low lev­els.

But it was com­ments by Re­serve gover­nor Glenn Stevens that lifted ex­pec­ta­tions the bank may move on rates — either next month or early next year.

He said while there were some pos­i­tive eco­nomic signs, there was scope for lower rates given the lack of price pres­sures across the coun­try.

“(Board) mem­bers also ob­served that the out­look for in­fla­tion may af­ford scope for fur­ther eas­ing of pol­icy, should that be ap­pro­pri­ate to lend sup­port to de­mand, ” he said.

Mr Stevens played down the rate rises by the ma­jor banks, say­ing their ac­tions would re­duce de­mand in the hous­ing sec­tor but only marginally.

Com­mSec chief eq­ui­ties econ­o­mist Craig James said the Re­serve was tak­ing out in­sur­ance by ex­plic­itly men­tion­ing there was scope to cut rates if nec­es­sary. Sec­ond-tier lender Bendigo and Ade­laide Bank said it would lift its stan­dard vari­able mort­gage rate by 0.12 per­cent­age points to 5.68 per cent.

Pic­ture: Michael O’Brien

Re­serve Bank Gover­nor Glenn Stevens.

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