The Reserve Bank of Australia has today announced the outcome of its fifth board meeting of the year.
As widely predicted, the RBA announced at 2.30pm today it will be keeping the cash rate on hold at 2.5 per cent.
“Inflation is within the target zone, so the RBA can afford to wait and see the recovery unfold,” ME Bank general manager markets John Caelli said.
“Economic growth continues to be below average, the transition to non-mining economic activity has further to go, and there will be some fiscal contraction from the Budget,” Mr Caelli said.
“We don’t see rates increasing until at least the first quarter of 2015,” he said.
All 16 economists and money experts in a recent survey by comparison website Finder.com.au expected rates to remain unchanged.
More than half of the economists and experts in the survey (nine of the 16 from AMP, ANZ, Bank of Sydney, ING DIRECT, RAMS, UBS, Heritage Bank, Moody’s Analytics and ME Bank) are forecasting the cash rate will rise next year.
Five respondents from Commonwealth Bank, Commsec, Urbis, HSBC and St George Bank expect to see a cash rate rise by the end of the year.
Ten of the 16 experts suggested the public’s reaction to federal Budget cuts will delay the change in cash rate, with nine stating the economy still has to grow in stability before any significant cash rate changes occur.