This week, home owners around the country have welcomed the Reserve Bank of Australia’s decision to keep interest rates unchanged after an unexpected rate rise in November. The central bank has left its key cash rate at 4.75 per cent, although there is talk of further interest rate rises early in 2011 as the wider economy shows general signs of improvement.
Although there has been some positive economic data recently, such as employment and trade figures, other areas have softened, including housing and retail. Given this mixed economic data, I believe it would have been unwise and unnecessary to increase the cash rate at this stage. It is much better that the RBA stops general inflation before it has a chance to get started.
The RBA’s decision was sensible and will be welcomed by home owners and businesses around the country, especially in the lead up to Christmas.
This decision will also offer some reprieve for those in the property industry, as rising interest rates have significant knock-on effects in the Australian property market. Our property market has displayed consistent momentum, and as a significant industry within Australia, this momentum should be encouraged.
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