Shoppers stay at home despite record low rates

Retail spending grew by only 0.1 percent over the month to July, only a quarter the pace expected, leaving annual growth at 50-year lows for the second month in a row, reports The Australian.

The Reserve Bank yesterday decided to keep the official interest rate on hold at 2.50%. In his statement Reserve Bank Governor Glenn Stevens said that the board would continue to assess the outlook and adjust policy as needed.

Economists are predicting that the next likely movement to the cash rate would be the Board's November meeting on Melbourne Cup day.

CommSec chief economist Craig James told The Australian, "The RBA is clearly waiting for the election to get out of the road to it can more accurately gauge what shape the economy is in, and determine how consumers,    investors and businesses are responding to previous rate cuts."

Prime Minister Kevin Rudd said that the decision to keep rates on hold to be good news for families paying off mortgages.

Most banks passed on the full 0.25% August rate cut putting home loan rates at historic lows. The current lowest variable rate is 4.49% and the best 1 year fixed rate stands at 3.99%.

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