Interest rates remain on hold at 2.50% in June

Interest rates remain on hold, as the Reserve Bank of Australia sits on the sidelines and watches what’s happening with the nation’s economy.

RBA Governor Glenn Stevens says continued stability is needed to help foster growth in demand.

He also says while there are signs of improvement in investment intentions in some sectors, resources sector spending is set to decline and public spending will be subdued.

Read the official RBA statement.

Rates have now been at record low levels since August 2013, with most analysts tipping they won’t move until next year.

Commercial property experts believe the RBA will be carefully watching consumer confidence and the housing market.

Commercial property experts believe the RBA will be carefully watching consumer confidence and the housing market.

Knight Frank National Research Director Matt Whitby says there has been some uncertainty in the market and a dip in consumer confidence surrounding the Federal Budget.

“On the back of this, even the housing juggernaut has slowed, with prices falling across all capital cities last month,” Whitby says.

“Notwithstanding this, interest rates are on hold for the foreseeable future as the RBA sits on the sidelines and analyses how the transition from mining investment to residential construction and infrastructure spending impacts growth.

“Expect rates to be on hold for the remainder of 2014, albeit with a watch on consumer behaviour and spending habits once the budget bills which are pushed through the senate take effect.”

Read more: Interest rates, the economy and commercial property

Colliers Director of Research Mark Courtney says any change in interest rates in coming months will be in response to house price movement and the value of the Australian dollar.

“In the meantime, all sectors of the property market have been buoyed by this period of low lending rates,” Courtney says.

“Looking ahead over the next few months, given the cautious approach towards credit by households and businesses, it seems highly unlikely that the Bank will be motivated to adjust rates in the near term.”

All sectors of the property market have been buoyed by this period of low lending rates.

CBRE Head of Research Stephen McNabb says there has not been much change in the growth outlook since the RBA last met.

McNabb says inflation risks are in check and fiscal policy is contractionary, with GDP likely to trend below its long term average in the next six months.

RP Data Research Director Tim Lawless says the RBA should be less concerned about the housing market overheating, with data this week showing house prices are cooling.

“Cooler housing market conditions shouldn’t surprise the Reserve Bank, who have been warning about overheated conditions and speculative investment activity in the Melbourne and Sydney markets,” he says.

Read more: Interest rates still not budging