Rates on hold

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Tuesday, 07 February 2012

Staff Reporter

The current mildly restrictive stance of monetary policy remains "appropriate", the Reserve Bank has claimed.

At its monthly board meeting today, the Reserve Bank (RBA) decided it was prudent to leave the cash rate on hold at 4.25 per cent after dropping the cash rate twice in two months at the end of last year.

While the announcement will no doubt shock a few industry pundits, with many economists pencilling in a 25 basis point rate cut in February, Deloitte Access Economics Chris Richardson said he wasn’t surprised to see the Reserve Bank “err on the side of caution”.

Last week, Mr Richardson told Real Estate Business that the sticky tape keeping Europe together was holding up quite well, thus eliminating the need for an immediate rate cut.

"The rate cuts haven't necessarily stimulated the property market as the RBA would have hoped. So the Board may prefer, moving forward, to leave rates on hold and see what happens in Europe," he said.

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Comments

0 #8 Peter K 2012-02-08 09:45

Gary got it absolutely right.

Far too quick to put rates up and far too slow to bring them down.

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0 #7 James Cassells 2012-02-07 18:46

Great so the mining sector is going great guns making big profits - The RBA's response "let's [hurt] the general public" - because the economy is booming, all the RBA is doing is making sure the share holders of the mining companies are able to reap the rewards and put the profits in their pockets. None of us in Joe Public land are seeing any of these funds making it into our pay packets. Everyone not associated with the mining industry is doing it very tough across across all sectors from each sector including Real Estate, Retail, Building and including every working family with a budget.
I can't wait to see what is going to happen once the overseas invest ers in the mining industry start profit taking, interest rates are going to start going up.The federal government needs to step in and disassociate the mining sector profits from the consumer/household sector when it comes to interest rates.

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0 #6 bcoombs 2012-02-07 17:59

Yes re-active instead of pro-active. One more cut may have stimulated nicely a very poor market. Instead they elect to wait until disaster strikes before they realize "we should have raised rates". Well guess what boys, in case you did not realize the current Prime Minister cannot count... there is nothing left in the till to stimulate the economy again. You will have to slash rates to 0%.

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0 #5 David McGuiggan 2012-02-07 17:34

Time to increase rents again to cover costs. Sure the government may be happy the renters will be paying more for housing.

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+1 #4 Chris 2012-02-07 15:24

What a pompous and disgraceful rabble is the board of the RBA. Not one of them would have less than a million dollars in their petty cash account, and they wouldnt know how to juggle a budget with a mortgage and kids to feed and educate on a basic wage. Sack the lot of them and put some real people in there.

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+2 #3 garry 2012-02-07 14:59

Too quick to put them up - too slow to move them down - the directors of the RBA are out of touch with small business, retailers , home owners, builders etc - they are like the government - weak, slow and Incompetent - we don't need the RBA in the new economy - outdated dinosaurs

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