RBA to stay in limbo this year as lenders move to jack up rates

first_imgMore from newsMould, age, not enough to stop 17 bidders fighting for this home5 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor5 hours agoAuctioneer Mark Frater at the auction of 71 Withington St, East Brisbane, which sold for $607,500 in March this year amid strong demand for inner city homes. Picture: Darren England.According to Mark Brimble of Griffith University, “broad economic indicators suggest the economy needs further support”. “The concerns re certain elements of the credit and housing markets is likely to keep the RBA on the bench.”Shane Garrett of the Housing Industry Association said there was “no particular advantage in changing rates one way or the other at this stage”, a sentiment shared by Noel Whittaker of QUT – “no reason to move either way” – and Clement Tisdell of UQ School of Economics – “no reason to change”.AMP Capital’s Shane Oliver said “worries about excessive home prices and debt growth prevent a cut, but low underlying inflation and wages growth prevent a hike and meanwhile growth is okay.”Michael Blythe of CBA said “low inflation says no need to raise rates. Hot housing markets says don’t cut rates”, while CommSec’s Savanth Sebastian said “there are doubts that rate cuts would actually do much in terms of driving the economy higher and lifting inflation”. According to home loan marketplace HashChing 95.6 per cent of more than 300 brokers surveyed also believed interest rates would stay on hold.But it warned that 91.25 per cent of brokers also believe that lenders would raise rates to follow recent increases by CBA and Westpac – even if RBA stays on hold.The RBA board is expected to release its decision at 2.30pm on Tuesday. Reserve Bank of Australia board will gather in Sydney Tuesday for its May monetary policy meeting, where experts believe they will agree to keep the cash rate target at 1.5 per cent. Picture: AAP Image/Dean LewinsTHE Reserve Bank board meets for its monthly monetary policy meeting Tuesday, but it’s lenders that will have the final say.RBA was expected to keep the official cash rate target on hold at 1.5 per cent – a view shared across the market with the ASX RBA Rate Indicator showing a 98 per cent expectation of no change to rates.Even the RBA cash rate survey by comparison site Finder.com.au had its 34 experts unanimous that RBA would sit on its hands, even though five of the last seven Mays have seen the RBA move on rates, according to Finder.com.au insights manager Graham Cooke.Over three quarters of the experts surveyed predicted the next official move would be up with four out of five of those believing it won’t happen until 2018.“The expectation across the board is that rates will rise in the next year, so locking in a low rate now could help you manage your repayments both now and into the future,” Mr Cooke said.last_img

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