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Cash rate stability could still be on the cards

By Kevin Kelly

When it comes to low interest rates, Australia has been spoiled rotten for some time now. It was back in December 2014 that the country was approaching one of the longest periods of interest rate stability, and for well over a year, the cash rate has been hitting record low after record low. But the question on the minds of most buyers of real estate in Bunbury and surrounding areas is: Can it continue?

If the thoughts of the Real Estate Institute of Australia (REIA) are anything to go by, the answer could well be yes. According to the REIA, the June 2015 quarter consumer price index figures confirm that the level of inflation is on the right track, which is a good sign for any future cash rate decisions. 

"[T]his should translate into a sustained period of low interest rates and be good news for home owners," affirmed REIA President Neville Sanders. 

The inflation rate is one of the key determinants for the board of the Reserve Bank of Australia (RBA), when it meets monthly to determine whether or not to raise the cash rate. In his 7 July statement on the cash rate decision, RBA governor Glenn Stevens noted that while conditions were right to leave the cash rate unchanged, forthcoming data around inflation would influence next month's decision. 

"With inflation under control, combined with a slow down in housing finance, it's reasonable to expect that the RBA board will not be increasing interest rates in the medium term, providing a stable outlook for home buyers," said Mr Sanders. 

While it can't be known if this period of stability – which began in May – will rival the previous year's in length, any stability is good for those purchasing real estate in Eaton, Australind and surrounding areas. 

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