Interest Rate Announcement

The Reserve Bank has decided to leave interest rates on hold over June with the likely prospect that the current settings will remain throughout the remainder of 2014 at least.

The Bank has indicated it is taking a wait and see approach and that rates are likely to stay at current levels reflecting recent mixed economic news.

The local currency has settled at levels probably higher than Bank expectations but with the recent upward trajectory moderating. The sharemarket has also recorded recent moderate growth but without a real sense of surging confidence or rising speculative activity with overall levels remaining below the previous peaks of 2007.

Housing markets are providing signs of reinvigorating following a softening of growth rates over the March quarter.

Although official interest rates remain on hold at the lowest levels for 60 years, indicative mortgage rates remain higher than the levels of 2009. This indicates scope for downward mortgage rate movements from competition between banks for market share. Low and falling mortgage rates will continue to fuel housing market activity.