Rates on hold

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.

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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