Reserve Bank keeps rate steady

• Official Cash rate remains at 4.75%


• Flood impacts cited as key factor


• Rate rises still expected later in the year

It was a scorching hot day in Sydney today, but Glenn Stevens was his calm, cool and collected self when he announced the Reserve Bank Board’s decision not to lift the official cash rate.
With December’s CPI coming in at 2.3%, well within the RBA’s target range of 2-3%, there was seemingly no immediate need to lift the official cash rate, a fact confirmed by today’s decision. Governor Stevens also cited the economic uncertainty and impact created by the floods across Queensland and Victoria as a key factor in holding off raising rates.
For once the pundits were on the money, with ABC, Fairfax and News Ltd journalists all concurring in the lead up that a rise today was extremely unlikely. That being said, most are penciling in at least one or two hikes this year, so it will be interesting to see how their predictions pan out as the year unfolds.

As for the banks?

We all know the banks can’t be trusted to tow the line, particularly given their actions post-Melbourne Cup. To their credit, they played ball in December, but can they keep it up?
Keep your eyes here as Mozo’s rate chasers bring you all the latest news from the banking front lines.
How long before the Reserve Bank moves on interest rates again? Find out or join the conversation at the new Mozo Answers now!