INTEREST RATE ANNOUNCEMENT Interest Rates remain steady over July • Rates remain on hold • Latest economic news indicates continued neutral stance • Early winter housing markets remain robust with steady prices growth continuing • Rates likely at current settings at least over remainder of 2014 Official interest rates will remain at current settings over July following todays decision by the Reserve Bank. Rates are likely to remain on hold at least over the remainder of 2014 as the latest economic news indicates a continuing neutral stance by the Bank for the foreseeable future. Latest unemployment rates remain relatively steady overall however some states have recorded some marginal improvements in what remain stubbornly high outcomes. Job vacancy data provided a definite positive for the labour market with demand for workers as measured by this series clearly on the rise. Other economic indicators remain largely benign with a direction-less sharemarket and continuing concerns over the impact of the recent federal budget on consumer confidence -although this is likely to have a short-term economic impact if any. The local currency also continues to strengthen to levels higher than Bank or market expectations. Home building levels continue to increase remaining well above the same period last year and continuing to provide economic activity although skewed to unit development which has longer term production outlooks and economic impacts. Housing markets continue to experience solid to strong buyer activity despite the onset of the usually quieter winter selling season. Auction listing numbers over June in both Melbourne and Sydney were at or near record levels with clearance rates remaining encouraging for sellers. House prices are likely to continue increase at moderate levels in most capitals over the remainder of the year although at reduced rates from the cyclical growth peak recorded over the final months of 2013. The stable short-term outlook for official interest rate settings will ensure continued solid activity for housing markets generally through winter and fuelled by increasing competition amongst banks for mortgage market share. Dr Andrew Wilson is Senior Economist for the Domain Group.
Posted on: Tue, 01 Jul 2014 05:01:09 +0000