The Reserve Bank of Australia (RBA) needs to leave official interest rates alone for at least another six months to allow previous rate cuts to continue to stimulate the economy, says mortgage broker network Finsure.
Finsure Managing Director John Kolenda said the RBA has kept its cash rate at the record low of 2.5 per cent for the past six months, providing much needed stability for consumers.
“We simply need more of the same for the foreseeable future from the central bank and keeping official rates on hold for at least another six months would be a good recipe for the Australian economy,” he said.
Mr Kolenda said the RBA’s interest rate strategy has been effective and leaving rates on hold had helped to stimulate competition in the home loan market.
“While the RBA has kept its powder dry since August, many lenders have been continuing to lower their variable rates in a benefit for existing mortgage holders and new home loan customers,” he said.
Mr Kolenda said leaving rates on hold provides certainty even though retail and residential property sales have shown improvement.
“The data is over a small period and we still haven’t seen the impact of the slowdown in mining and the anticipated increase in unemployment,” he said.
“Even though we are likely to see good stable results, any increase in rates in the near future is also likely to change consumer sentiment back to being conservative.
“Changing this sentiment has taken numerous rate decreases and raising it will have a material impact on consumer confidence, which we don’t need right now with other uncertainties.”