RBA surprise – no February rate cut

The Reserve Bank stunned investors and many of the nation's leading economists by keeping the cash rate steady at 4.25 per cent yesterday.

Analysts said that Reserve Bank Governor Glenn Stevens’ statement revealed the RBA was comfortable with the economic outlook after cutting rates twice in quick succession late last year.

Mr Stevens said the board would “adjust the cash rate as necessary to foster sustainable growth and low inflation.”

Mr Stevens said “Financial market sentiment, though remaining skittish, has generally improved since early December. Share markets have risen and term funding markets have reopened, including for Australian banks, albeit at increased cost compared with the situation … in mid-2011.”

Source: Herald Sun

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