The Reserve Bank of Australia (RBA) is providing some stability to Australian consumers battling cost of living increases and an uncertain economic climate by leaving official interest rates alone, says leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said the central bank now looked likely to keep the cash rate at 4.75 per cent for the entire year.
Mr Rushton said the interest rate outlook was much clearer now than a few months ago when pundits were predicting movement in both directions.
“While there is considerable debate regarding when it’s going to happen, there is a growing sentiment toward the next rate decision being downwards,” he said.
Mr Rushton cited the deteriorating global economic environment as well as a sluggish domestic economy outside of the mining boom as the catalysts behind an anticipated rate reduction.
“The rate reprieve should bolster falling consumer confidence in the lead up to Christmas and build a more positive outlook for Australians dealing with cost of living pressures and the volatile economic climate,” he said.
“Ultimately, Australians are seeking actions, such as a drop in interest rates, for full confidence to return and increased activity across struggling sectors such as manufacturing and retail.”
Mr Rushton said that lender competition, specifically for fixed rate products, is providing further evidence that the market is primed for a rate reduction.
“Lenders are launching fixed rate specials almost daily with markets aggressively pricing for future rate cuts,” he said.