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Interest Rate Update – March 2018

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Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

A raft of economic data recently released continues to show a slowly improving domestic economy.  Company profits during the final quarter of 2017 increased by 2.2 per cent across the majority of industries, with mining company profits increasing 4.2 per cent due to higher demand for commodities such as iron ore.  Approvals for the construction of new homes rose 17.1 per cent in January which far exceeded the anticipated 5.0 per cent improvement. These results come ahead of December’s gross domestic product figures, due to be released tomorrow, with most Economists expecting a quarterly growth rate of 0.5 per cent.

The positive economic data is not restricted to Australia with strong growth throughout many of the US service industries.  The planned tariffs on steel and aluminium may start a more aggressive trade policy (globally) but the specifics remain unknown at this stage.

Notwithstanding the improvement in the Australian, US and other global economies, together with the current uncertainty of the US tariff situation, the RBA remains keen to take a cautious approach with monetary policy with no change to the cash rate expected for some months.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

 

Interest Rate Update – February 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

The last half of 2017 and the commencement of the new year has seen an improvement in our domestic economic and employment growth. We have seen more buoyant business conditions, strong non-mining investment and increased business and consumer confidence.

However, with the headline inflation at 1.9% (below the RBA’s target range of 2.0% – 3.0%) and wages growth remaining low, the RBA is comfortable to retain the Cash Rate at current levels.  The recent strengthening of the Australian dollar to over US80c, albeit on the back of a weaker US dollar, is another reason why we do not expect any change to the Cash Rate until well into 2018.

Inflation in the US also remains low but investors have interpreted Friday’s employment figures, which have shown US wages rising at strongest rate since June 2009, as evidence the US economy is heating up. This has influenced higher bond yields and, together with concerns of rising inflation, has caused today’s large global sell-off in stocks.  2018 will certainly be a dynamic year.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au