Interest Rate Changes this February?

Want the latest details of interest rate changes for February? According to home owners can expect no change in interest rates in February thanks to shaky economies around the world.

Finance experts say the Reserve Bank is closely monitoring markets in China and the US for possible impacts on the Australian economy. The ASX has already felt the effects of slowing growth in China and falling global oil prices, losing $100 billion in value in the first eight trading days of 2016.

Any ongoing volatility could be the driving force behind the RBA’s next move, says Ryan Pickles, financial planner at Hamilton Morello. “I think what the concern will be now is the global economy and that’s the reason they may cut rates potentially,” he says. “The European Central Bank left rates unchanged, however they said they may move in March. I think also the Reserve Bank will have a look at what the US Fed and China is up to.”

Unemployment data released this month showed Australia’s jobless rates were steady at 5.8%, which bodes well for a stable year of interest rate movements. But if unemployment increases, it may be cause for a rate decrease, Pickles says. “If we’ve got jobs coming off and our growth starts to fall, the only way they can really pick that up is by cutting rates,” he says. “So I think it’s a wait and see approach at the moment – a very cautious wait to see what’s happening in the global economy.”

ING Direct treasurer Michael Witts agrees, saying the RBA has got the current rate of 2% right. “They’re highly unlikely to do anything anytime soon,” he says. “The RBA would be quite happy with the way the exchange rate has responded to the market volatility. “I think there are some people arguing for the RBA cutting rates in the first quarter, but I think that’s premature because I think they’ll want to see what the world actually looks like and let the current equity volatility run its course. It’s not having a major impact at this point in time.” Witts believes interest rates will be on hold for the better part of 2016. And with property prices cooling in Sydney, he says this year will also be easier for homebuyers and investors. “For buyers it’s a pretty good sign that the RBA would be keeping rates on hold,” he says. “Now we are seeing sellers adjusting to meet buyers revised expectations, whereas previously the buyers were having to adjust to meet the sellers expectations.”

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by Kate Jones, journalist for

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