The Real Estate Institute of Queensland (REIQ) has welcomed the Reserve Bank of Australia’s decision to leave cash rates on hold this month, an important pause after 10 consecutive rises took it to a near 10-year high of 3.6 percent.
It was the first time in 11 board meetings, the RBA has left its key interest rate unchanged.
The central bank had steadily lifted it since last May – from a record low 0.1 percent, set during the Covid pandemic, by a total of 3.5 percentage points in an effort to rein in inflation.
Even then, economists had been fairly even in their opinion of whether rates would rise or remain unchanged.
This month RBA governor Philip Lowe was a little more conservative in his outlook than last year, hinting at the possibility of further interest rate rises should inflation not continue to retreat.
“The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,’’ he said in a statement.
“The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty.’’
REIQ CEO Antonia Mercorella said the pause was a welcome reprieve to homeowners and small businesses who were unfairly carrying the burden of fixing the inflation curse.
“Around 650,000 households in Queensland are mortgaged and it’s likely the RBA’s aggressive tightening cycle is already weighing heavily on many mortgage holders,” she said.
“A pause in interest rate hikes is an appropriate response at this time, allowing households and businesses a few moments to pause and assess their expenditure.
“It also gives first home buyers a chance to stabilise their borrowing capacity.
“Further, with loan activity for new builds at 18-year lows in Queensland, the pause will give consumers more confidence to proceed with building their dream homes.”
She called for the government to ensure that fiscal policy did its part to curb inflation.
“Now it’s important that the government follows suit to ensure that fiscal policy matches monetary policy.”
