The Reserve Bank Board voted to lower the Official Cash Rate for the first time since August 2013. Source: Timberbix
“With Australia’s inflation pulse at its slowest in several years but domestic demand remaining weak, the RBA Board have cut rates to provide an opportunity for the economy to grow at a stronger rate than might otherwise have occurred,” said Housing Industry Association (HIA) Chief Economist, Harley Dale.
“New residential construction has been the star performer of the Australian economy in recent years, generating considerable employment along the way, but wider domestic consumption and investment has failed to catch the ride.
“A further ‘touch down’ to interest rates will help maintain very healthy levels of new home building while hopefully broadening the base of Australia’s economic growth.
“The Reserve Bank has also indicated that the Australian dollar needs to fall further and it sees another interest rate cut as helping to achieve that outcome.
“The RBA today hinted at a further elevation in the use of macro prudential tools to restrict mortgage lending in a targeted manner.
“Care needs to be taken that any such action does not have adverse impacts on confidence and activity in the broader residential market.”