Reserve Bank of Australia Holds Rates

There were no surprises to see the Reserve Bank of Australia (RBA) leave the official cash rate at 4.75 per cent as it reviewed economic data at its March board meeting.

Many economists are now predicting only one further rate rise late in the year as the rate rises in 2010 are still having an impact through much of the economy.

In particular the November rate increase accompanied by the bank’s additional rate increase has had a significant influence on consumer sentiment and many elements of the economy, particularly the retail sector are still struggling as a result.

What we would really like to see is the RBA stay its hand for the remainder of 2011 to allow consumer confidence to return and to take undue pressure off household budgets.

Mortgage holders, particularly those having to contend with repairing flood affected homes just want an extended period of stability.

The RBA could do a lot more to restore consumer confidence by remaining on the sidelines for the rest of the year.