The Reserve Bank has left official interest rates on hold at its monthly meeting today, averting a possible confrontation with the Federal Opposition.
Following its meeting, bank governor Glenn Stevens confirmed rates would be left at 2.5 per cent.
The board became the first since it gained full independence to cut rates during an election campaign which it shaved a quarter percentage point in early August.
In a statement barely changed from recent announcements, Mr Stevens said the current level of interest rates was considered appropriate.
“The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values, and further effects can be expected over time, including from the declines in rates seen over recent months,” he said.“The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.”
Mr Stevens again focused on the high Australian dollar which today edged up above the US90 cent mark.
“The Australian dollar has depreciated by around 15 per cent since early April, although it remains at a high level,” he said.
“It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.”
And in a sign for Tony Abbott, who is expected to take office as PM from the weekend, Mr Stevens said the economy was likely to remain sluggishness for some time as it adjusted to lower levels of mining investment.
The decision follows signs that the housing sector is picking up steam with figures this week showing the strongest growth in house prices in four years.Building approvals have also started to surge, growing by 55 per cent in WA alone over the past year.