The cash rate had been kept at 1.5% since August 2016, but the RBA has now cut the official cash rate by 25 basis points.
A weakened Australian economy and a slight rise in the unemployment rate has finally pushed the RBA to move on interest rates, according to realestate.com.au Chief Economist Nerida Conisbee.
“There has been some weakness in the Australian economy for some time – in particular inflation has been particularly low (and non-existent in the March quarter), wages have gone nowhere, retail trade has been dismal. Consumers may have been particularly unhappy, but they at least were not particularly worried about their jobs,” says Conisbee.
“The one shining beacon in the Australian economy was very low unemployment and it is likely the RBA was looking out for flow on impacts to the rest of the economy from that. With the flow on impacts not materialising and the unemployment rate rising, they have decided to cut.”
Recent falls in house prices in major capital cities appear to have plateaued according to RBA Governor Philip Lowe.
“…in some markets the rate of price decline has slowed and auction clearance rates have increased,” he says.
“Mortgage rates remain low and there is strong competition for borrowers of high credit quality.”