Earlier this week we saw the Reserve Bank of Australia’s (RBA) minutes from its latest Board meeting, which decided to cut the official interest rate to 1.5 per cent. Now, ordinarily a rate cut may indicate that an economy is in trouble… yes? However, that does not seem to be the case with the recent August cut. From very low inflation and a too-high dollar (something which once upon a time was seen as a good thing!) to another possible rate cut on the horizon – here we explore all the positives that are anticipated following the recent minutes.   

Unlike many other media articles reports which tend to focus on the negative, we thought we would take a leaf out of Peter Switzer’s book (well his recent Switzer article to be exact) and instead focus on the positives to come from the recent RBA minutes, shining a light on why we should be proud of our economy and where it is headed.

 We will start with economic growth.

 Recently the RBA said, “While GDP growth had been stronger than expected in the March quarter, reflecting unanticipated strength in resource export volumes, it was expected to have been more modest in the June quarter. Economic growth was expected to pick up to be above estimates of potential by mid-2017.”

 According to Switzer this means we can expect solid growth for the remainder of the year, and beyond.

 “In simple terms, the Bank expects us to grow in the 2.5 – 3 per cent band until mid-2017 and then we should kick higher, which is great news for job creation if they’re right,” writes Switzer.

 Peter also writes that, “The RBA thinks inflation won’t spike any time soon and the Board was annoyed at the damn dollar staying high, as it was complicating the ‘adjustment process’ following the end of the mining boom.”

Perhaps this is a hint that we can expect another rate cut in the not so distant future? Seems that many industry experts feel that will be the case. We agree.

But the real positive story to come from the recent RBA minutes is not about low inflation or a too-high dollar for that matter. Instead, it is the fact that the Bank does not seem spooked at all about current house prices.

 Here is CommSec’s Craig James’ view on the matter: “Importantly, the Central Bank has removed concerns of excessive house price growth from its wall of worry – essentially one less hurdle to even lower interest rates in the future,” he concluded. “And with the Aussie dollar drifting higher, it is very likely that policymakers will contemplate another rate cut in coming months. CommSec has a further rate cut priced in for November.”

 So there you have it. In summary, it seems the economy is growing well and is expected to only flourish even more over the coming months. Plus, we cannot forget the other rate cut which seems fairly probable in the near future – just ask almost anyone. And, when it comes to rising house prices, as Switzer puts it, “We shouldn’t be worried about rising house prices because the country’s second most important policy body isn’t! (Meaning the RBA).

 Seems there is more good happening with our economy than much of the media would like us to believe. If like us and industry expert Peter Switzer, you feel that the economy could well be on the way up, now may be the perfect time to explore new investment opportunities.

For more information or to schedule an appointment, contact HS Brisbane Property on 0419 782 133.