The Reserve Bank of Australia has held the cash rate at a record low 0.75 per cent, as widely expected by economists.
The decision will allow Christmas and New Year spending activity to filter through before the central bank’s board considers the possibility of a cut to 0.5 per cent at its next meeting in February.
Some economists had identified a case for a fourth cut in seven meetings on Tuesday as weak consumer spending and stagnant wages growth continues to keep a lid on business investment, jobs numbers, and inflation.
The decision came on the eve of what is likely to be a lacklustre set of quarterly GDP figures, with annual growth expected to rise to 1.7 per cent from a decade-low 1.4 per cent.
The latest retail data is also set for release this week and is similarly tipped to improve but remain underwhelming.
The Australian dollar climbed from 68.19 US cents to 68.33 US cents within six minutes of the RBA’s 1430 AEDT decision.
Property prices and investors appear to have been the biggest beneficiaries of the RBA’s 0.25 per cent interest rate reductions in June, July and October.
In tandem with looser lending standards, the cuts have helped put housing values on track to reverse an 18-month downturn and hit new peaks by March, even as the broader economy flatlines.
– more to come