Today the Reserve Bank went against the expectations of the market, by keeping interest rates unchanged.
There has been no rise since the decsion to lift rates by 0.25% in November 2006.
Media speculation of a rise was intense in Australia, with some journalists reporting that 70% of Economists expected a lift in rate. We were confident that a rise was unnecessary as inflation has been kept in check and the recent surge in the Australian dollar would have made it difficult to justify a rise.
We should see continued stability in the rate through the year, particularly as we move towards the Federal election in the near future.
The continued stability of the Australian interest rate market will be a strong catalyst for property markets which will welcome the news to build on the improving confidence of the East Coast markets, and the additional borrowing costs of the rapid increase in prices on the West Coast.
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