RBA leaves record low 2% cash rate on hold
Economists and financial experts had unanimously predicted the RBA’s decision to leave the cash rate unchanged at 2% in June.
Unlike the first drop in the cash rate this year in February, when most lenders passed on the full cut, last month’s record low cut was met with more reservations from financial providers. Of the Big 4, only ANZ passed on the full 0.25% cut. For the first time in months, some lenders have actually increased fixed rates.
Governor Glenn Stevens observed in a statement that, “the Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.”
He also noted that low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with stronger lending to businesses and growth in lending to the housing market broadly steady over recent months.
Analysts are predicting that while the cash rate remains steady for now, there could be a further cut later in 2015.