Australia's interest rates remain on hold at 0.25 per cent in October
The Reserve Bank of Australia has kept interest rates on hold at the historic low of 0.25 per cent for the seventh consecutive month.
The RBA today decided to keep the nation's official cash rate unchanged despite increasing concerns over the prolonged economic cost of COVID-19.
Today's decision marks the seventh month in a row without a change.
RBA Governor Philip Lowe said the decision was based on the uneven recovery of the global economy due to the coronavirus.
"The global economy is gradually recovering after a severe contraction due to the pandemic. However, the recovery is uneven and its continuation is dependent on containment of the virus," Mr Lowe said in the RBA's decision.
"While infection rates have declined in some countries, they have increased in others. The recovery is most advanced in China, where conditions have improved substantially over recent months. Globally, inflation remains very low and below central bank targets."
CoreLogic Asia Pacific head of research Tim Lawless said the low setting for interest rates, along with policies aimed at ensuring liquidity across markets, has been a key factor in supporting housing market activity and insulating home values.
"The hold decision comes on the same day the federal government is set to announce both an unprecedented level of government debt, as well as additional stimulus measures aimed at supporting jobs growth, consumption and improving productivity," Mr Lawless said in a statement.
"The focus now will be on whether the stimulus measures announced in the budget tonight are enough to offset the tapering of JobKeeper and the effect of higher mortgage arrears as home loan repayment deferrals become less prevalent."
Finder insights manager Graham Cooke said a standalone cut of 15 basis points is unlikely to have much of an impact on Australia's economy.
"The cash rate has fallen by 125 basis points over the last year and a half– 15 more is unlikely to make much of a difference beyond making the RBA feel like they are at least doing something," Mr Cooke said.
"The decision to hold the rate for now also suggests that the RBA wants to assess the budget in detail before making a decision about further moves."
Meanwhile, RateCity.com.au research director Sally Tindall said mortgage holders don't need to wait around for the RBA to save money.
"While home-owners didn't get any reprieve from the RBA this month, they can still make significant savings by shopping around," Ms Tindall said in a statement.
"If you're fortunate enough to still have your regular income and a decent amount of equity in your home, you're in prime position to capitalise on the refinancing boom.
She said according to RBA data, the average existing home loan customer is on a rate that's half a percent higher than a new customer.
"For households currently facing financial hardship due to COVID, don't be afraid to call your bank and ask for a better deal," she said.
"If the RBA cuts rates by 0.15 per cent in the coming months, the spotlight will be on the banks to see if they pass it on in full to their loyal customers."
In March, the RBA made two dramatic cuts – including one out of cycle – in order to stimulate the nation's economy in response to nationwide lockdowns.
The current level of 0.25 per cent is the lowest in Australian history.
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Originally published: https://www.9news.com.au