Rates on hold, next move likely to be down

The decision to keep the cash rate on hold at 4.35% came as no surprise, with most economists agreeing the next move on rates will be down.

Although the timing of an RBA rate cut remains uncertain and dependent on inflation outcomes.

A boost to confidence

Nonetheless, the hold decision, alongside lower inflation and a growing expectation that interest rates will reduce later this year, should help to provide a further lift in confidence.

Historically we have seen a close relationship between consumer sentiment and the volume of home sales.

Following the 6.2% rise in the February consumer sentiment reading from Westpac and the Melbourne Institute, a further lift in confidence could be accompanied by a rise in home purchasing.

This could add to housing demand that has already remained quite resilient despite the higher interest rate environment and cost of living pressures.

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Jason Gwerder
Thursday, 21 March 2024

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