Cash rate on hold at 2.5 per cent.
Economists expect interest rate downward cycle has ended.
No cash rate change leaves millions of savers better off.
* Accelerating house prices and a flow of positive economic data vindicated the Reserve Bank’s decision to keep rates on hold today, despite an uncertain global economic backdrop.
* RBA Governor Glenn Stevens shrugged off mounting US political and economic instability to keep the cash rate at 2.5 per cent for the third month in a row, as improving domestic economic data suggested the bank’s easing cycle could be drawing to a close.
* The decision was widely expected by economists, with most predicting the next move could be up – but that could be almost a year away as the RBA gives rates a chance to further fire up the economy.
* The chance of a rate cut shrank to almost zero yesterday as new data showed house prices and retail sales are gaining momentum and the long-run decline in job advertisements was coming to an end.
* A solid rise in department store, clothing and footwear sales helped lift national retail spending by 0.8 per cent in September to $22.15 billion, twice as quickly as economists had expected and the biggest monthly rise since February.
* Mirroring last month’s influences, the risk of runaway house prices, particularly in Sydney and Melbourne, would have heavily swayed the RBA’s decision today.
* Talk of a housing bubble was given extra oxygen yesterday, as Australian Bureau of Statistics showed Sydney house prices rose 3.6 per cent over the three months to September 30, while house and apartment prices in the eight capital cities were 7.6 per cent above their level a year earlier.
* The rate decision will be welcome news for the nation’s savers.
* According to comparison website finder.com.au, 6.4 million households don’t have a mortgage and rely on higher interest rates for extra cash in the bank.
* Finder.com.au spokesperson Michelle Hutchison said the RBA cash rate pause will be a timely festive gift for savers.
* “It’s the last rate decision to impact the Christmas shopping season because it generally takes a month for rate changes to flow through to our bank accounts,” Ms Hutchison said.
* “It could also spell the end of the interest rate downward cycle, as many economists agree that rates may start to rise next year,” she said.
* Market watchers are now saying its eagerly awaited quarterly statement will show a pick-up in the crucial non-mining sectors of the economy.
* The heads of two of the big four banks – ANZ’s Mike Smith and NAB’s Cameron Clyne – both said last week they were expecting to see some follow-through into business borrowing in the coming half year because of the record low rates.
Original Article published at www.news.com.au by Staff Writer, News.com.au 5/11/2013