Written by Brendan Simpkins
The Reserve Bank of Australia has just announced its decision to leave the cash rate unchanged at 1.5%.
It was a widely expected to hold the rate having not changed since way back in 2016.
In a statement released this afternoon, Governor Phillip Lowe said improvements in global economy has raised commodity prices – boosting the national income.
“Conditions in the global economy have improved over recent months,” he said.
“Both global trade and industrial production have picked up. Labour markets have tightened in many countries. Above-trend growth is expected in a number of advanced economies, although uncertainties remain.”
Governor Lowe said the housing market conditions continue to vary across the country.
“In some markets, conditions are strong and prices are rising briskly, in other markets, prices are declining,” he said.
“In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for two decades.
“Growth in rents is the slowest for two decades.”
Speaking on growth in household income, Governor Lowe said that it was still outpaced by growth in household borrowing used largely to purchase housing.
“By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness,” he said.
“Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions.
“A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.”