RBA keeps rate on hold ahead of next week’s Budget

The RBA Board chose to keep the record-low cash rate on hold today, waiting to see the market impacts of next week’s Federal Budget.

Federal Treasurer Josh Frydenberg has indicated next Tuesday’s Budget will be focused on stimulating job growth rather than reeling-in the COVID-19 budget deficit, as the Government seeks to drive the national unemployment rate below 6%.

Loan Market Executive Director Andrea McNaughton said the economy was performing well, especially on the global stage.

However, she said the RBA had made it clear it wanted to see the key metrics for inflation (2-3%) and unemployment (below 6%) change before lifting the cash rate.

McNaughton also noted the RBA Board had not changed the cash rate on the eve of the May Federal Budget since 2016.

Also influencing the RBA’s decision to hold the cash rate was a rise in new property listings as sellers sought to take advantage of current market prices, McNaughton said.  Loan Market affiliate and Australia’s largest real estate network, Ray White, recorded $6.1bn in sales over March, representing its best monthly result in every state market.

However, McNaughton did not foresee buyer demand dropping off anytime soon; Ray White’s national auction clearance rate has remained above 80% for the last 12 weeks.

“Brokers are at the frontline of future property demand, and we’re still exceptionally busy,” said McNaughton.

“Loan Market notched $3.1bn in lodgements over March which was a monthly record across our network. 

“Many of those borrowers are now coming through to settle on their purchases, and more borrowers are following suit.”

Treasurer Frydenberg has indicated next week’s Budget will build upon stimulus measures including the HomeBuilder Grant - which was recently amended to allow for an extension to construction dates - the SME loan guarantee and childcare incentives.