Interest Rate Update

Declining Housing MarketAt its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.50 per cent, effective 3 August 2016. I have got to say that this move has surprised me. Even with low inflation, a slowing housing sector and moderate growth, the Reserve Bank is not left with much monetary stimulus for any future global shocks. In one of his last statements as the outgoing Governor Glen Steven said,

“Recent data confirm that inflation remains quite low. Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.” Continue reading