RBA leaves cash rate on hold at 2% for November

The Reserve Bank of Australia has left the the official cash rate unchanged at 2% for the month of November.

As the nation waits to watch today’s Melbourne Cup, the bank decided that leaving the case rate unchanged was appropriate as the “prospects for an improvement in economic conditions had firmed a little over recent months”, RBA governor Glenn Stevens said in a statement this afternoon.

The official cash rate was last cut in May by 25 basis points, with the bank having now kept the rate on hold at 2% for six consecutive months.

Stevens again indicated that a future cut to the official cash rate may be on the cards, saying further easing of monetary policy may be required in the future “should that be appropriate to lend support to demand” given the outlook for inflation.

“In Australia, the available information suggests that moderate expansion in the economy continues,” Stevens said.

“While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions over the past year. This has been accompanied by somewhat stronger growth in employment and a steady rate of unemployment.”

“Inflation is low and should remain so, with the economy likely to have a degree of spare capacity for some time yet. Inflation is forecast to be consistent with the target over the next one to two years, but a little lower than earlier expected.”

The RBA’s decision follows moves by the major banks to increase variable home loan rates in October.

The Commonwealth Bank, Westpac, NAB and ANZ all lifted variable mortgage rates in October.

The banks said the increases were needed because of market conditions and changes to regulations that require the major financial institutions to hold more capital against their portfolios of home loans, according to the ABC.