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Reserve Bank keeps interest rates on hold at record-low 0.75 per cent

Published: (Updated: ) in Australian News by .

Despite ravaging bushfires and a looming coronavirus outbreak, the RBA has decided to keep interest rates on hold in February.

The Reserve Bank of Australia has kept interest rates on hold at the record-low level of 0.75 per cent.

Despite ongoing concerns from the country's bushfire crisis and the coronavirus crisis, the nation's top economists decided to hold their hand ahead of more expected rate cuts in 2020.

The current cash rate of 0.75 per cent represents the lowest marker ever set by the RBA, following a historic three cuts in 2019 to stimulate the nation's economy.

RBA governor Philip Lowe in his monetary statement said the decision to kept rates on hold was bolstered by promising data that property prices were recovering.

"There are continuing signs of a pick-up in established housing markets. This is especially so in Sydney and Melbourne, but prices in some other markets have also increased," said Lowe.

"Mortgage loan commitments have also picked up, although demand for credit by investors remains subdued.

"Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality."

Tim Lawless, Head of Research at Corelogic, said he believes the RBA is leaving itself more room for cuts later in the year.

"The hold decision was generally expected, especially considering the increased uncertainty brought about by the extent of bushfires domestically as well as the unfolding implications associated with the Corona virus outbreak," said Mr Lawless. 

"The RBA may need to keep some rate cutting ammunition up their sleeve should these scenarios play out more severely than expected."


How low could Australia's interest rate go? Theoretically, it could go as low as is necessary to stimulate the economy – particularly when conditions are so tough the IMF predicts Australia's growth to be less than Greece.

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According to IBIS World Senior Industry Analyst Michael Youren, it is quite likely that we could see interest rates drop below zero, but don't expect Aussies to pay the banks to keep their money anytime soon.

"Economic growth is slowing locally, as it is in many other economies," Youren tells

"There is the strong chance that we will see a negative cash rate as a part of quantitative easing policy in the near future. However, it is very unlikely that this will be passed on to customers in the form of charges on deposits and payment for loans.

"Instead, the retail interest rates on mortgages will simply fall further and consumers will be able to borrow larger amounts."

Source: 9News

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