Reserve bank keeps rates on hold
In a surprise move by the Reserve Bank of Australia (RBA), the national interest rate was kept at ...
In a surprise move by the Reserve Bank of Australia (RBA), the national interest rate was kept at its current level of 4.25 per cent on February 7.
This decision came despite previous calls from a number of industry sectors to reduce the cash rate, with the construction industry saying that it could help to increase consumer demand.
In addition, the Australian government seemed to think that the rate would change - with prime minister Julia Gillard stating on February 6 that mortgage holders could react negatively if a drop was not fed down the line.
Gillard asserted: "People who are customers are entitled to be very angry if they don't see interest rate reductions passed on."
Announcing the central bank's decision, RBA governor Glenn Stevens explained that the choice was made in line with current market conditions.
Stevens said: "With growth expected to be close to trend and inflation close to target, the board judged that the setting of monetary policy was appropriate for the moment.
"Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy."
While the decision to leave the cash rate at 4.25 per cent may disappoint some sectors of the economy, it could be a sign for business owners that it has begun to stabilise and that now is the time to begin investigating purchasing or trading up their commercial property holdings.