RBA meeting February 2012: Rates On Hold at 4.25%

The Reserve Bank of Australia (RBA) has left official interest rates unchanged at 4.25 per cent at its board meeting on February 6, 2012.

RBA decision to keep the official cash rate on hold was a bit of surprise for financial markets as most experts predicted a 25 basis points cut. However RBA indicated that Europe risks are now skewed to the downside:

  • The acute financial pressures on banks in Europe were alleviated considerably by the actions of policymakers.
  • Financial market sentiment has generally improved since early December.
  • Australian economy continues to growth close to trend.
  • CPI inflation has declined as expected as impact of the floods a year ago have been unwinding.
  • Unemployment rate increased slightly in mid year, though it has been steady over recent months.
  • Credit growth remains modest.
  • Housing prices are stabilising.

RBA also noted that interest rates for borrowers have declined to be close to their medium-term average, as a result of previous cuts, so the Board judged that the setting of monetary policy was appropriate for the moment.

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Published on February 2-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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