iscover
In a move that has left industry pundits reeling, the RBA has decided to raise the official interest rate to a ________, the first time the RBA has increased the rate in more than six years.
In the lead up to today’s decision, all 33 experts responding to the finder.com.au RBA survey predicted a hold verdict, while 93.62 per cent of brokers surveyed by HashChing also tipped that the RBA would keep the official cash rate on hold.
The last time the rates moved was a cut in August 2016, however the RBA has not increased the official interest rate since November 2010 when it was raised by 0.25 per cent to 4.75 per cent.
While surprising, 80 per cent of panellists surveyed by finder.com.au anticipated the next cash rate move would be a rise however of those, 60 per cent predicted the rise wouldn’t occur until the second half of 2018. Just two predicted a rate rise this year.
Dr Andrew Wilson from Domain Group was one of the two to predict a rate hike before Christmas, noting the RBA is “maintaining an optimistic medium-term view of the economy”. Noel Whittaker from QUT was the other. He said: "I don't think they are ready to lift yet – but they will be thinking about it."
However, the rise flies in the face of most forecasters’ predictions as many argued there was no case for a move in either direction.
Alan Oster from NAB said it was “still too early to change”, arguing that house prices are still strong in Sydney and Melbourne and the economy and labour market are “doing well”.
Mark Crosby from Monash Business School added: “Aside from political tensions in North Asia nothing to move the RBA in either direction. Weakening of the USD makes the case for imminent rises less compelling, and no reason to cut."
LJ Hooker’s Matthew Tiller also predicted a hold verdict, observing: “Little discernible change to economic indicators over the past month. Price growth across most east coast property market has moderated and listing number have begun to rise in the run up to spring."
John Flavell, Mortgage Choice CEO admitted that while he was surprised, the result was not wholly unexpected and warned that Australia’s lenders “will be quick to pass on” the rate hike.
He said: “While I am surprised by the timing of the rate increase, I knew the Reserve Bank would be inclined to increase the cash rate sooner rather than later.
“Over the last two months, many of Australia’s lenders have started increasing their variable and fixed rate home loan pricing. Rising funding costs combined with additional pressure from the Australian Prudential Regulation Authority to limit the level of investor lending, has ultimately forced many of Australia’s banks to make some significant changes to both their pricing and policy,” he concluded.
ISCOVER 
