In a surprise move, the Reserve Bank of Australia announced it is leaving the cash rate unchanged at 3.75% as it waits to see the effects of earlier rate rises.
In a statement released yesterday, Governor Glenn Stevens stated the continued legacy of the financial crisis affected its decision.
Stevens also noted that economic conditions in Australia have been stronger than expected, adding that we have lower than expected unemployment, modest inflation and expanding credit for housing.
So, sanity prevails. The short term money market had already priced in a 0.25% increase and got it wrong. They may just leave the increase in there for next month’s RBA meeting.
