- Official rates on hold at final meeting for the year
- Economic uncertainty prevails with recent indicators deteriorating
- Late spring housing markets weakening
- Chance of 2015 mid-year rate cut if jobless keeps rising
At
its final meeting for the year, the Reserve Bank announced today that official
interest rates would remain at the current level until the next meeting
scheduled for February 2015.
Interest
rates have been at the 60-year low of 2.5 percent now for 16 consecutive
months, equalling the previous longest steady sequence set in 1997-98.
This
month’s economic data remains both underwhelming with the October national
jobless rate stuck at the previous month’s rate of 6.2 percent – the highest
recorded since July 2003.
Home
building approvals decreased sharply over September as growth in house approvals
continues to decline with unit approvals accounting for the overall increase in
planned dwelling construction this year.
The
Australian dollar has weakened over the month as an improving US economy continues
to push the local currency downwards in line with policymaker’s objectives.
Concerns however continue to increase over the outlook for the level and
sustainability of US growth and the global economy generally.
The
stockmarket remains restrained after experiencing a roller coaster ride over
October. Relatively flat retail sales over September add to the overall subdued
recent performance of the national economy.
Late
spring housing markets have weakened with trend weekend home auction clearance
rates for both Melbourne and Sydney falling to the lowest levels in over a
year.
The
Sydney market clearly leads capital city prices growth however the Melbourne
market continues to weaken with house price growth this year unlikely to meet
the inflation rate. The low mortgage rate driver of market activity that drove
prices growth over the past year is generally diminishing in the face of modest
incomes and profits growth from continuing underperforming local economies.
With
house price growth now clearly moderating within an overall weakening economic
environment, interest rates are set to remain at current levels over the
shorter-term. A continuing deterioration in the jobless rate however will
increase the likelihood of a rate cut mid-year 2015.
