The decision to leave rates on hold was described as “close to a line-ball” decision by BT chief economist Chris Caton in an update to the market this morning.
The RBA can’t have been surprised that mortgage rates were pushed up, Mr Caton told Fairfax’s The Australian Financial Review.
“It’s quite clear from the minutes of their October meeting that they were a long way from cutting then,” he said.
For the RBA to have cut in November, “they would have moved a long way in a very short period of time”, Mr Caton said.
While economists from all of the big banks correctly predicted that the RBA would stay its hand on Melbourne Cup day, the decision split other commentators.
AMP chief economist Shane Oliver was of the opinion that the RBA would move rates downwards today.
“The RBA will cut its cash rate to offset mortgage rate hikes from the big banks (flowing from higher capital requirements) at a time when growth is still struggling,” Mr Oliver predicted.
The ANU’s Centre for Applied Macroeconomic Analysis (CAMA) Shadow Board attached a 65 per cent probability to 2 per cent being the “appropriate policy setting”.
