A WEAKER-than-expected rise in consumer prices combined with strong unemployment data has convinced the Reserve Bank of Australia to leave the official cash rate on hold.
This was the ninth consecutive month that the Reserve Bank has left the official cash rate on hold at the historically low level of 2.5 per cent.
The latest data from the Australian Bureau of Statistics found the headline inflation rate for the first quarter of this year rose by 0.6 per cent - slightly less than the 0.8 per cent rise economists were predicting.
This weaker-than-expected result meant the annual inflation rate is currently sitting at 2.9 per cent - within the Reserve Bank's target range of 2 to 3 per cent.
So with inflation now sitting comfortably within the RBA's target range, the board would have thought it prudent to leave the official cash rate on hold for yet another month.
In addition to the weaker-than-expected inflation result, the recent positive employment data would have also encouraged the board to leave rates on hold.
According to the Bureau of Statistics, the unemployment rate dropped 0.2 per cent in March to sit at 5.8 per cent.
This drop suggests the Australian economy is in pretty good shape at the moment, so there is no urgent need for the Reserve Bank to play around with its current monetary policy setting.
Further, property prices continue to climb moderately across the country, with recent research by RP Data showing capital city dwelling values rose 2.3 per cent over March.
After a flat result in February, dwelling values have managed to post a 3.5 per cent capital gain over the first quarter.
With that in mind, now is a good time for potential home buyers to jump onto the property ladder and capitalise on the positive market conditions and growing property prices.
There is no doubt rates will climb eventually, but right now they are sitting at historically low levels.
So for those potential borrowers who have the means to get onto the property ladder, now may be a good time to do so.
Alternatively, if you already own a home, now may be a great time to review your current mortgage and make sure you are still in the right product for your needs, as you may find there is a better deal out there for you.
■ For more information contact Richard Windeyer on 1800 01 LOAN.