The rate that stops the nation: RBA keeps rates on hold at 3.25%

The Reserve Bank of Australia has today broken its 7-year tradition of moving rates on Melbourne Cup Day, deciding instead to hold the official cash rate at 3.25%.

In a statement, Governor Glenn Stevens said "with prices data slightly higher than expected and recent information on the world economy slightly more positive, the Board judged that the stance of monetary policy was appropriate for the time being".

Seven years of change - why the hold now?

October saw the continued steadiness of the Australian dollar, a slight increase in inflation, ongoing relative stability in the EuroZone, low unemployment figures and rather moderate growth from China.

Traditionally, the Reserve Bank Board, especially under current Governor Glenn Stevens, has been known for its conservative decisions and tendency to err on the side of economic caution. Combine all the above factors together, and hey presto - you have this month's decision.

Give yourself a rate cut

No rate cut announcement from the RBA means any cuts in variable interest rates from the banks are extremely unlikely, but now is as good a time as any to shop around and find a better deal.

We're continuing to see a lovely downwards trend in fixed rate home loans - UBank are currently offering a 4.79% 1 year Fixed-rate, but only for the first 479 customers, so get in quick!

And for savers?

Don't sit tight on your existing savings account by default - scout around and see if you can score a better deal for your money elsewhere.

Top savings rates right now are:
RaboDirect High Interest Savings: 5.46%
ING Savings Maximiser: 5.35%
Citibank Online Saver: 5.35%
Bankwest TeleNet Saver: 5.25

Predictions for December?

Economists are still predicting that rates will go to 3% by year end, so check back here in a month to see what happens on rate cut day. With Chrissie coming up fast, the pressure from the retail sector will be mounting and RBA might decide to give home owners an early Christmas present.

Read last month's Reserve Bank interest rates update.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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