Chinan interest rates unchanged in April after Reserve Bank decision

RBA governor Philip Lowe is expected to address the question of house prices on Monday night in an unusual televised address to an RBA board dinner in Melbourne. Photo: Henry ZwartzThe Reserve Bank of has held the cash rate steady at 1.5 per cent for the 12th consecutive month amid growing pressure for it to increase rates to contain soaring house prices.
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The futures market is pricing in no change in ratesuntil late 2018, when there will be an increase.

In the year to March 31,Sydney home prices climbed 18.9 per cent, Melbourne prices 15.9 per cent and the average of capital city prices 12.9 per cent.

In the past week, both then Prudential Regulation Authority and the n Securities and Investments Commission have announced tighter rules and increased supervisionof banks’ lending to investors in an effort to contain the growth in lending to investors to 10 per cent.

RBAgovernor Philip Lowe is expected to address the question of house prices on Monday night in an unusual televised address to an RBAboard dinner in Melbourne.

CoreLogic head of research Tim Lawless saidthe governor’s statementmade clear that the board had been stuck “between a rock and hard place”.

“They aren’t likely to push rates higher just to quell housing market exuberance; doing so could push inflation lower and the n dollar higher as well as cancel out some of the much-needed stimulus that many sectors of the economy are benefiting from,” he said.

“On the other hand, the bank would be loath to push rates lower out of concern for adding further fuel to an already overheated housing market.

“With the cash rate likely to remain on hold, at least for the remainder of the year, it’s looking increasingly like other factors will be necessary to undertake the heavy lifting required to bring about a housing market slowdown. Mortgage rates have been rising despite the steady cash rate, which will act as a disincentive to market demand.”

Ahead of the RBA announcement, the n dollar was buying US76.04¢.

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