1 July 2014
Interest Rates See Longest Period of Stability in
Almost a Decade
Today’s decision by the RBA to leave interest rates unchanged at 2.5 per cent means that we are
seeing our longest period of interest rate stability in nearly a decade, said the Housing Industry
Association, the voice of Australia’s residential building industry.
“The RBA have been saying for some months now that the economy requires stable interest rates.
Consequently, today’s decision is in line with our expectations,” commented HIA Senior Economist
Shane Garrett. “We expect that rates will remain unchanged over the next number of months at least
as unemployment remains too high and economic growth is below trend,” Shane Garrett predicted.
“The record low interest rates we have had for the past twelve months has done much to fuel growth
in the most interest rate sensitive sectors of the economy,” explained Shane Garrett. “We estimate
that new dwelling starts grew by 10 per cent during 2013/14, hitting one of the highest annual totals
on record,” Shane Garrett noted. “Low interest rates have also been instrumental in helping the ailing
renovations market finally take a turn for the better,” added Shane Garrett.
“We welcome the RBA’s indication that rates are set to remain steady for some time,” Shane Garrett
said. “Low interest rates will support high levels of new home building, helping to alleviate Australia’s
housing shortage,” explained Shane Garrett. “This will be a key factor in enhancing Australia’s
international competitiveness.” “However, action on freeing up land supply and improving the
infrastructure funding mechanisms are just two necessary preconditions for this to happen,”
cautioned Shane Garrett.
Duration in Months of Previous Interest Rate Holds, 1994 to 2014
Source: RBA
Dec '94 to Jun '96
19
Jul '97 to Nov '98
17
Jun '02 to Oct '03
17
Dec '03 to Feb '05
15
Mar '05 to Apr '06
14
Nov '10 to Oct '11
12
Aug '13 to date
12
0
2
4
6
8
10
Number of Months
For further information please contact:
Shane Garrett, HIA Senior Economist
0416 633 261
12
14
16
18
20