RBA keeps rates on hold

RBA keeps rates on hold

The Reserve Bank of Australia has kept the official cash rate 'on hold' for the month of March at 2.25 per cent.

The announcement comes after the RBA cut the cash rate last month for the first time since August 2013.

The decision to stay 'on hold' was anticipated by St George economist Janu Chan, who suggested the RBA was waiting to observe the effects of last month’s cut.

“We think that the RBA will still want to give the economy more support, but it will prefer to wait at this meeting so it can assess developments, particularly the currency and housing markets,” she said.

However, she predicted a rate cut in coming months “remained possible”.

Commsec economist Savanth Sebastian said last month’s cut was a “line-ball decision” but suggested the RBA may have been influenced by strong company results.

“Reporting season has been better than expected,” he said.

The Bank of Queensland's Peter Munckton described the decision to keep rates unchanged as a “tight call”.

“The RBA will almost certainly go again in the early months of 2015,” he said. 

“Which month the RBA [chooses to] cut will come down to tactical factors, such as the value of the Australian dollar.”

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