House Prices, Household Debt and Lack of Housing Keep RBA On Hold

Jun 5, 2018

Looking to keep financial stability under wraps, the Reserve Bank of Australia (RBA) has left the official cash rate on hold for the 22nd consecutive month. This move, says the RBA, allows both businesses and households to continue building their financial backing so that they can prepare for expected rate rises in 2019.

So, based on this information, what’s the bottom line? Well, economists say Australian inflation is still low, along with wage growth. Unemployment, on the other hand, hovers around 5.5% and economic growth is sluggish. However, the RBA won’t cut rates to stimulate growth and consumer confidence because it fears that this move will overinflate house prices, and further increase household debt. Instead, the RBA will hold tight and hope that the good times are on the horizon, just as they are predicting.

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