RBA keeps rates on hold at 2.5 per cent

THE RBA has opted to leave the official cash rate on hold at 2.5 per cent, in a move widely expected by markets.

Reserve

THE RBA has opted to leave the official cash rate on hold at 2.5 per cent, in a move widely expected by markets.

RP Data National Research Director Tim Lawless said positive housing data in recent weeks means the decision is no surprise.

"From a housing market perspective, the release of the RP Data – Rismark Home Value Indices yesterday showed home values were still rising across Australia, up a strong 1.2 per cent over the month of January," he said. 

"Dwelling approvals are up close to 22 per cent over the 2013 calendar year and there have been consistent rises in the number of new home sales. We expect housing market conditions to remain buoyant while mortgage rates remain so low, however further rate cuts are looking like an outside bet at best,"

JP Morgan chief economist Stephen Walters said earlier in the day high inflation in the December quarter has taken the chance of a rate cut off the table for some time.

“It's very difficult for an inflation-targeting central bank, even if they wanted to cut rates in the medium term, to think about doing it after a high inflation result,” he said.

But Mr Walters said high unemployment would compel the RBA to cut rates later in 2014. JP Morgan expects unemployment to rise to 6.5 per cent by mid-year.

More to come.