At the May board meeting of the Reserve Bank of Australia, it was decided to keep rates on hold again (Media Release/2014). This is no surprise as the RBA have been advising that there will “be a period of stability in interest rates”.
The RBA note that in Australia, there appears to be moderate growth in consumer demand, and some indication that business conditions and confidence have improved. In addition, there has been some improvement in indicators for the labour market although they expect it will be some time before unemployment declines consistently.
However resources sector investment continues to decline significantly and public spending is also expected to be subdued (we will know more in next week’s Federal Budget).
Inflation is expected to be within target over the next two years, and the RBA reiterate that rates are expected to be stable to foster sustainable growth.
As to when they might rise, the Sydney Morning Herald reports that according to Credit Suisse, financial markets have wound back their rate hike expectations, with around a 50% chance of an increase in rates in the next 12 months.
In terms of home loan interest rates, fixed rates can in some instances still be lower than variable rates, so if you would like to find out more, please contact us.