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RBA makes October cash rate call
In this special announcement, partnered by Legal Home Loans, learn the outcome of the Reserve Bank’s monthly board meeting.
Grace Ormsby
The Reserve Bank of Australia (RBA) has made a judgment call on the cash rate for October amid a flurry of debate around lending and ever-increasing property prices.
It’s the tenth straight month that the cash rate has stayed so low, and comes as Victoria and NSW look to decrease restrictions on citizens through the easing of lockdown.
Chief economist at CreditorWatch, Harley Dale, has said the RBA “has established a clear intention to retain strong support for households and businesses”.
With the cash rate staying at a record-low for the 10th consecutive month, Mr Dale noted, “there is no place to increase the OCR until 2024, and policies are being maintained to assist in keeping downward pressure on borrowing costs”.
He believes this environment “will be very beneficial for businesses and households as they look towards the hopeful easing of lockdown restrictions in late October/early November”.
“The highly stimulatory monetary policy climate will also be crucial in moving through the inevitable bumpiness and uncertainty of a post-lockdown economy. This is something the RBA will be keeping a keen eye on.”
But, despite the cash rate maintaining its position, lending is set to tighten once again, with the Treasurer revealing recently that he had met with regulators to discuss “the balance between credit and income growth” and consider whether “carefully targeted and timely adjustments” to lending are required.
“The approaching reintroduction of lending restrictions for residential property, which the RBA plays an integral role in, makes this a key area to watch in approaching months,” Mr Dale continued.
He acknowledges the RBA has been noting upward pressure on property prices and housing affordability for a considerable time and can be expected to begin “upping the ante”.
“Due to the combination of easing lockdown restrictions and tighter lending conditions, the RBA faces a different dynamic in coming months than has been seen over 2021 to date.”
