The current low interest rates on offer from many Australian lenders likely alleviate some of the RBA’s concerns though, with Lawless believing they are now low enough to stimulate activity in the property market.
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The decision means the cash rate has remained on hold since May, and will do so for at least the next two months, with the RBA’s next meeting not until February.
Alan Fox, managing director of Propertunity, said: “The RBA will want a big retail spend for Christmas – so won’t raise rates, but there may be a need to cut rates in 2016 – but that is for next year”.
The decision to hold was widely expected and the Australian dollar held steady at around US72.60c before climbing to around US72.75c.
The consumer price index has remained below the lower end of the Reserve Bank’s 2 percent-to-3 percent target for a year and there’s little immediate prospect of it returning to that level.
“This has been accompanied by stronger growth in employment and a steady rate of unemployment”.
“The reason that AUD has rallied is that markets priced out one RBA cut after having two cuts priced in”.
RBA seems to be less anxious over the risks from rising house prices and assures of keeping policy accommodative.
The central bank last moved in May when it cut the official cash rate by 25 basis points to its historic low, following an earlier cut in February.
His global assessment was little changed from last month, with growth expanding at a moderate pace, although with some further softening in Asia, continuing growth in the USA and a recovery in Europe.
“Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand”.
The RBI held off on a rate cut after GDP data announced Monday showed a 7.4 percent growth during the second quarter helped by a surging manufacturing sector.
“Inflation is under control but the major uncertainty relates to the “pass-through” of the lower exchange rate in lifting prices of imported goods”.
Stevens again said: “The Australian dollar is adjusting to the significant declines in key commodity prices”.
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