(8 February 2012 – Australia) The Reserve Bank of Australia (RBA) left rates on hold at their meeting on Tuesday, leaving home owners to wait at least another month for more interest rate relief.The cash rate was kept at 4.25 percent, although a third rate-cut in a row was expected.
The Australian dollar rocketed on the news, jumping about one US cent to US$1.081 – a six-month high – within minutes of the announcement. It also touched fresh records against the euro and hit a 27 year-high against the pound.
The central bank took heart from recent signs that the US economy is picking up growth and declining concerns about the European debt crisis.
‘Recent data from the United States suggest a continuing moderate expansion after a soft patch in mid 2011,” RBA Governor Glenn Stevens said in a statement accompanying the decision. ‘Growth in China has moderated as was intended, but on most indicators remained quite robust through the second half of last year.’
The RBA’s decision may take the heat off the country’s major banks – at least for now. Several of the banks had indicated that they may not pass on another rate cut by the central bank because their own borrowing costs continue to rise.