RBA leaves rates on hold
Chris ZapponeMarch 3, 2009 - 8:23PM Page 1 of 2 Single page view
Update The Reserve Bank has defied expectations by leaving its key interest rate on hold for the first time in seven months as it waits for the full effect of previous rate cuts to spur the economy.
The central bank left the cash rate at 3.25%, the lowest since 1964, arguing that Australia is relatively well placed to weather the economic slowdown. Analysts had forecast at least a 0.25 percentage-point cut.
Surprise decision on ratesThe Reserve Bank of Australia leaves the official cash rate at 3.25%.
''The Australian financial system remains strong,'' RBA Governor Glenn Stevens said in an accompanying statement. Mr Stevens said the recent round of cuts delivered by the central bank over the past six months was ''working to deliver large reductions in interest rates to end borrowers.''
He also said that demand in Australia hasn't weakened ''as much as in other countries.''
Analysts said today's decision was a close call given the deteriorating outlook for most of Australia's main trading partners, which will eventually dent demand at home. The RBA, for now, is taking an optimistic view.