RBA Keeps Rates on Hold

Posted on November 7th, 2012 · Posted in News

The Reserve Bank has left interest rates on hold following a robust inflation reading in September, marking the first Melbourne Cup day in six years that rates will remain unchanged.

The cash rate was held steady at 3.25 per cent today, the level it moved to when rates were cut by 25 basis points in October.

The decision to delay further interest rate relief will surprise the majority of economists who anticipated a cut, and disappoint borrowers who were hoping for a rate reduction.

The RBA said a rise in inflation during the September quarter, in part due to the introduction of the carbon tax, was one of the factors in today’s decision.

“The introduction of the carbon price affected consumer prices in the September quarter, and there could be some further small effects over the next couple of quarters,” said RBA governor Glenn Stevens in the accompanying statement.

“With prices data slightly higher than expected and recent information on the world economy slightly more positive, the board judged that the stance of monetary policy was appropriate for the time being.”

The RBA also stressed that the full effect of the 150 basis points in cuts it’s made since November 2011 had not been be felt by consumers and businesses.

“Further effects of actions already taken to ease monetary policy can be expected over time,’’ said Mr Stevens.  “The Board will continue to monitor those effects, together with information about the various other factors affecting the outlook for growth and inflation.”

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