Anyone expecting the United Kingdom’s decision to leave the European Union to impact the Reserve Bank of Australia’s interest rate ruling was mistaken. At its July meeting, the RBA opted to leave the official cash rate at its historic low of 1.75 percent.
In a media release, Glenn Stevens, the governor of the RBA, explained that investors have repriced their assets after the United Kingdom’s shock referendum result. This has left financial markets around the world volatile, but the full effects of the Brexit vote are yet to be seen.
Mr Stevens’ views were supported by independent economist Saul Eslake, who told Money Management magazine “[The] Brexit vote does cast a shadow, but it is too early to tell whether that shadow will last long enough and be dark enough to warrant a monetary policy response.”
Interest rates have now been on hold since May 2016, when the RBA surprised many by cutting 25 basis points from the official cash rate. However, experts predict we may soon see movement in the market. According to Finder.com.au’s survey of 30 leading economists, two-thirds expect interest rates will fall even lower when the RBA meets again in August. This reduction will likely be influenced by the release of inflation data from the June quarter, which will give a better indication of any long-lasting impact the Brexit vote has on our local economy.
A smaller number of finance professionals also expect future interest rate cuts, but predict we won’t see them until November. That could make an excellent early Christmas present for the millions of Aussies with mortgages.
With interest rates set to remain low for some time yet, there’s no better time to invest in the local real estate market. Speak to Chase Edwards today on 1300 854 833 to learn how we can help you secure your first investment property or expand your existing portfolio.