No change in the interest rates for October

Reserve bank of Australia (RBA) did not change the October cash rate from 2.50%. RBA has kept the official interest rate unchanged, for two months in a row. Experts say that there will be no more cuts. It will either be the same or it will start to rise.

Reason for constant rate

In the RBA meeting held at its headquarters in Sydney, the board has decided to keep the rate at record low of 2.5% and was partly, because of the high house price in the capital cities. The house prices started to hike after the election and the annual increase in the price is 0.5% for the five mainland states per week, accounting to 5.7% housing price rise. Sydney experienced an 8.0 % increase and Perth has the highest rise of 8.8%. The least increase in house price is seen in Adelaide with 0.1%.

Effect of RBA rate on the economy

The Australian economy is in its 22nd consecutive year of growth, from 1991.The house prices continue to elevate, the commodity prices have come down from their peak and there is an improvement indicator in business and household settlements.  The economy grew by 0.6% in June and is expected to follow the same trend with the government’s forecast on the unchanged interest rate in 2013-2014 financial years.

Source: http://www.theaustralian.com.au/business/economics/rba-keeps-rates-on-hold-at-25pc/story-e6frg926-1226730893529#mm-breached

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