No Cup Day cut as RBA holds for November
The Reserve Bank has met expectations by remaining sidelined on Melbourne Cup Day.
At its board meeting today, the RBA left the official cash rate untouched at 1.50%. The decision came in spite of weak inflation figures, with the consumer price index (CPI) increasing by just 1.3% for the 12 months to the end of the September 2016 quarter.
No surprise for most economists, or financial markets, which had priced in just a 4% chance of a move.
The finder.com.au monthly RBA survey found 90% of experts expected the decision.
Commonwealth Bank's Savanth Sebastian said debate remained on the benefit of further rate cuts, while HSBC’s Paul Bloxham referred to governor Phillip Lowe's public admission that he would take a flexible view on the 2-3% inflation target band.
One of the main reasons for the cash rate hold, tipped by economists, was booming house prices in Sydney and Melbourne.
“The performance of the housing market was likely a key topic of discussion amongst RBA board members, with CoreLogic's October results released today showing a further 0.5% rise in dwelling values across the capital cities," CoreLogic research head Tim Lawless said.
"Since the first rate cut this year in May, CoreLogic's hedonic index has increased by 4% across the combined capitals, with more substantial rises reported in Sydney and Melbourne."