RBA holds rates steady as the housing market softens. But another hike is still possible
The housing market matters for the broader economy. The RBA will be watching closely before it makes another interest rate move.
The Reserve Bank of Australia has maintained its key interest rate at 4.35% amid concerns over the housing market's slowdown. While another rate hike remains a possibility, the central bank is closely monitoring the effects of previous interest rate increases on the overall economy. Housing conditions have eased, with falling house prices, particularly in Sydney and Melbourne, and a decrease in housing credit demand.
Westpac reported a 20% drop in mortgage applications since May. RBA Governor Michele Bullock stated that the board will consider further rate hikes if necessary to bring inflation under control, despite the current moderate inflation rates. The jobs market, however, shows signs of weakening. The RBA remains cautiously optimistic, stating that economic growth is expected to slow significantly, with GDP growth forecasted to fall to just 1.4% by December from 1.9% in June.
Overall, while holding the cash rate steady provides time for the RBA to assess the effectiveness of previous hikes, the situation remains delicate, with inflation risks and economic slowdown posing challenges for future policy decisions.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
