RBA Meeting July 2012: Rates Unchanged at 3.50%

The Reserve Bank of Australia (RBA) has left official interest rates unchanged at 3.50 per cent at its board meeting on July 3, 2012. As widely anticipated the decision to hold comes after RBA cut the cash rate by 50 basis points in May and 25 basis points in June, citing instability in Europe and a mixed outlook for domestic growth.

However, today RBA governor Glenn Stevens said these concerns had eased, following more decisive action by eurozone leaders, and improved local data:

  • Growth in the world economy picked up in the early months of 2012, but Europe is still weak and pace of growth is slower in China.
  • Australia's terms of trade have peaked, though they remain historically high.
  • Financial market have responded positively to signs of further progress towards longer-term sustainability in Europe.
  • Share markets have remained volatile.
  • In Australia the economy continued to grow in the first part of 2012, at a pace stronger than had been earlier indicated.
  • Labour market conditions firmed a little, but the rate of unemployment remains low.
  • Inflation is expected to be consistent with the target of 2–3 per cent range over the coming one to two years.
  • Interest rates for borrowers have declined to be a little below their medium-term averages.
  • Housing market remains subdued.

The Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate.

It's unlikely that any of the banks will increase their rates independently from RBA this time around, especially when many economists believe there is 75-100 basis points cuts on the cards in the next 12 months.

To figure out your home loan repayments for the current rates - please use our mortgage repayment calculator.