Interest Rate Update – April 2016

Cash Rate – No Change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 2.00%.

Notwithstanding a strong Australian dollar the RBA remains comfortable with a contained inflation rate and a slowly improving labour market. Business credit has expanded (0.7% for the month of February) resulting in an annual growth rate of 6.5% (up from 5.5% for the year to February 2015). Housing credit remained at 0.5% for February (7.3% for the year compared to 7.1% for the prior year). The Australian Industry Group manufacturing index also delivered positive news last Friday morning showing an improvement of 4.6 points to 58.1 – the highest level since 2004.

Whilst we remain confident the cash rate will be left untouched for the remainder of 2016 the RBA will keep a close eye on a strengthening Australian dollar.