Finance Finance News No Christmas gift from the RBA: Rates on hold

No Christmas gift from the RBA: Rates on hold

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The Reserve Bank has left Australia’s official interest rate unchanged at the historic low of 2.5 per cent, in line with economists’ forecasts.

Concerns about ongoing uncertainty in the global economy has led the the central bank has cut the cash rate by 225 basis points since November 2011.

The most recent cut came in August, when the RBA lowered the rate by 25 basis points.

However, improving Australian economic data has prompted some economists to predict the RBA will raise the cash rate late next year.

Reserve Bank officials continue show raise concerns about the economic impact of the persistently high value of the Australian dollar.

During a speech at the end of last month, Reserve Bank Governor Glenn Stevens said that intervention in currency markets could be an “effective and useful” instrument to bring down the dollar’s value.

However, Mr Stevens did not hint at any plans to use such measures in the near future.

“That doesn’t mean we will always eschew intervention,” he said.

In recent months, Mr Stevens has also highlighted the importance of the non-mining sectors, particularly housing, in ensuring economic growth.

Figures released by the Australian Bureau of Statistics yesterday showed the number of new homes approved for construction fell by 1.8 per cent in October, but remain 23.1 per cent higher than during the same month last year.

Retail sales figures released today show a 0.5 per cent increase in consumer spending during October.

The result was above economists forecasts, and means retail sales have been increasing consistently for the past six months.

The RBA will make its next interest rate decision in February.