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Interest rate decision: Macquarie Bank’s thoughts [VIDEO]

By now you know that interest rates have been held at 2.0%.

What does this mean for property investors?

Here’s what the Macquarie Bank had to say:

The Reserve bank’s October meeting kept official interest rates on hold at 2%.

Rates have been at this level since May.

The Australian economy continues to grow at a moderate pace of 2.0%, but below the long term trend of 3.25%.

Business investment 

Non-residential construction is trending in the right direction however business investment remains elusive.

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Australian dollar 

The Australian dollar has depreciated 20% against the US dollar from this time last year, which is helping to re-balance the economy, boosting export sectors such as education, and some services sectors such as tourism, and offsetting weak commodity prices.

The complexity of exchange rate impacts is well demonstrated where the US dollar exchange rate has moved in the right direction, but the Australian dollar has not depreciated against the Chinese Yuan.

Business and consumer sentiment

There may have been a discussion by the RBA on the potential longevity of recently improved business and consumer sentiment, following the change in the Australian government’s leadership.

It’s this mixed outlook that is likely to have kept the RBA on the sidelines, continuing to assess and remain patient.

The next RBA board meeting will be held on Melbourne Cup Day, Tuesday 3rd November.



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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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