Article by ForexTime
The Reserve Bank of Australia has left the cash rate on hold for the 14th consecutive month, in a move widely expected.
The cash rate has been kept at a historic low of 2.5 per cent since August last year. The 14-month rate hold is the longest in more than 10 years.
In a statement, RBA governor Glenn Stevens said the Bank expected growth to be a little below trend for the next several quarters.
The Reserve Bank is caught between a rock and hard place. It’s unable to increase interest rates for fear it would be at the expense of economic growth but is concerned that the property market bubble could ultimately burst and create another large problem, a debt hangover for property buyers and a higher – potentially damaging – level of delinquencies for banks.
RBA governor Glenn Stevens has certainly been throwing out plenty of hints that something may need to be done. Suggestions borrowers would need to increase the proportion of the deposit relative to the value of the property appears to be gaining currency.
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