OCR Announcement – holding until 2020….

Official Cash Rate

The Reserve Bank has held the Official Cash Rate at its all-time low of 1.75% and stated the next change won’t be until 2020.

To be honest, I am not that surprised by them holding it (nor would I have been surprised if they had put it up or down).  I am more surprised that they have stated no changes until 2020 – that means it would have been at the same level (which is the lowest in history) for around 4 years – from October 2016 to somewhere in 2020.

There was an immediate downward impact on the value of our dollar – benefiting exporters but expected to lead to an increased cost of living given import costs will increase.

Of course, the expectation of the continued low OCR is that mortgage lending interest rates will stay in line – i.e. low.  Indeed, I have just seen an update from a major bank lender as I write this – they have reduced their 5-year rates by 0.6% (60 basis points).

It will be interesting to see how this plays out – but what I do know for sure is that you should make your own decisions about what you think may happen because I don’t think I can point to an economist who has got interest rate projections correct.

So many people have opinions on what will happen but only you should decide how you feel about the future and your situation.

I remember fixing at something like 7.85% back in or around 2006/07 because I was so confident the rates were going up – and then, the very next month, the downward trend started……..you just never quite know what will happen!

Here is an article that might share some light about interest rates.