After raise after raise, there has been some reprieve for borrowers with the Reserve Bank of Australia deciding to keep interest rates on hold following their June meeting.
The RBA has clearly taken into account the debt crisis in Europe, as well as closer to home economic data including somewhat less than enthralling consumer confidence and weak retail sales.
The RBA’s statement, however, did leave economists in the dark. It was unusually short, making no reference to consumer spending, the housing market, or jobs.
So, what does all this mean?
Well, as we’ve seen, global factors can change relatively rapidly. By keeping Australia rates on hold this month, following numerous rises, Australian borrowers now have the opportunity to take stock and become acclimatised to the previous rises, whilst the RBA – in remaining neutral – has more flexibility when it meets in the coming months to adjust accordingly.
In our view, don’t get too comfortable. We would expect at least one increase in the next month or so.