Interest rates left on hold for now
The Reserve Bank has elected to leave official interest rates on hold at 3.25 per cent, defying economists bets on a Cup Day cut. A survey of 27 economists by financial news service Bloomberg had 20 tipping a rate cut. However, the RBA has elected to break a six-year streak of moving interest rates on the first Tuesday in November.
The decision keeps the cash rate just above a low of 3 per cent that it dropped to in 2009 during the peak of the economic fallout from the Global Financial Crisis. The general view is that the RBA, always vigilant to fight off inflationary pressures, is taking a wait and see approach as the US economy slowly recovers and China's economy begins to stabilise.
Australia now has the highest interest rates of anywhere in the developed world. While lower interest rates would be a welcome development for borrowers, retirees will benefit from today's decision. But it's also important to note that very low rates is a sign that conditions have deteriorated - never a good thing So i think today, along with the Melbourne Cup, is a good day to celebrate.