RBA points towards interest rate pause

The Reserve Bank of Australia (RBA) has suggested borrowers may get a reprieve from further interest rate hikes when it meets again on June 1st.

In the minutes of its May meeting, which have been released today and were seen by the AAP, the RBA said it was choosing to raise the official cash rate to 4.5 per cent in order to bring borrowing rates back to their decade-long average level.

"[Board members] noted that, if lenders responded as expected to another rise in the cash rate, interest rates faced by most borrowers would then be at around average levels over the past decade," read the minutes.

In addition, the May minutes show that after authorising the rate increase, "members felt that this would leave monetary policy well placed for the present" – a comment which the AAP predicted could point to a prolonged period of frozen rates.

This week, a study released by economic research firm BIS predicted that Australia’s population growth is set to slow over the next two years, thereby easing the upward pressure on interest rates.

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