The Reserve Bank of Australia (RBA) left interest rates on hold at 4.25 percent today, ending widespread speculation amongst analysts it would cut rates for the third month in a row.
In its first meeting for 2012, the RBA decided to hold rates after noting borrower interest rates have declined to close to their medium-term average thanks to rate cuts in November and December.
Governor Glenn Stevens said growth and inflation are close to trend and target, making the current monetary policy appropriate for now.
“Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy,” he said.
The RBA also cited lessening concerns about the European economy and growth in the US and China as behind its decision to hold rates.
“…recent data from the United States suggest a continuing moderate expansion after a soft patch in mid 2011. Growth in China has moderated as was intended, but on most indicators remained quite robust through the second half of last year,” Stevens added.
Despite not getting any help from an official rate cut, borrowers are being urged to negotiate a better interest rate from their lenders. RateCity CEO Damian Smith says borrowers could get 1 percent off their variable home loan rate just by asking for a discount.
“Borrowers shouldn’t be disheartened that the Reserve Bank kept the cash rate at 4.25 percent today because the sluggish home loans market means the ball is in your court,” Smith said.
“We’re seeing lenders offering discounts of up to 1 percent off their standard variable rates for basic home loans and many lenders – including the big four banks – have said they are willing to negotiate to retain their share of the home loan market,” he added.