The central bank has announced its cash rate decision following its monthly monetary policy board meeting.

Despite expectations of a cut, the Reserve Bank of Australia (RBA) has held the official cash rate at 1.5 per cent.

Most analysts (75 per cent) surveyed by rate comparison website Finder.com.au predicted the hold verdict; however, expectations of a cut have intensified over the past few months, particularly off the back of flat inflation data reported by the Australian Bureau of Statistics (ABS) and continued weakness in the housing market.  

Senior economist at AMP Capital Shane Oliver was among the 25 per cent of analysts surveyed by Finder that expected a rate reduction.

“Rate cuts were already on the way thanks to slower economic growth and the downturn in the housing cycle, but weaker than expected underlying inflation in the March quarter argues that the RBA should move sooner rather than later,” he said.

Treasurer of ING Australia Michael Witts agreed: “The inflation print is a concern for the RBA, notwithstanding the positive labour market, the RBA will be seeking to reflate the economy.

“It must be remembered that interest rate changes have a lagged impact on the economy.”

However, economist at Moody’s Analytics Katrina Ell said the unemployment rate would need to “consistently head higher” before the RBA makes a monetary policy adjustment.

Head of corporate affairs at Mortgage Choice Jacqueline Dearle added that the RBA would hold off on a cut until after the upcoming federal election.

“History shows us that the RBA does not move the cash rate during an election campaign, so the RBA is likely to hold the cash rate in May,” she said.

“However, a number of factors would make the case for a cut when the board meet again in June or August, should some of the key current factors prevail.”

Of the 38 analysts asked to predict the trajectory of monetary policy, 84 per cent predicted the RBA would cut the cash rate by August.    

Despite some concerns that a cut would rekindle the housing boom, CoreLogic’s head of research, Tim Lawless, said that it would not provide the same stimulus to housing that it has in the past due to tighter credit conditions.  

“If the cash rate does move lower later this year, a reduction in mortgage rates would provide some support for housing demand; however, we may not see quite as much stimulus for housing market conditions that we have seen after previous rate cuts,” he said.

“Generally, housing sentiment remains low and borrower mortgage serviceability is still assessed based on mortgage rates of at least 7 per cent.

“Households who already have a mortgage or prospective borrowers who are able to satisfy lender credit policies will be the winners if interest rates do fall later this year.”

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Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. http://goanimate.com/movie/0M4bvcZzgIbI?utm_source=linkshare&uid=0u6RGtWsmlVc Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085. http://www.ljgrealestate.com.au http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html http://au.linkedin.com/in/lindajanedebello http://twitter.com/GillandDebello http://www.facebook.com/pages/ljgrealestate
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