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Published on August 8th, 2012

Cash rate on hold at 3.5%

The Reserve Bank of Australia has left the cash rate at 3.5 per cent for the second meeting in a row in a move that has come as little surprise to economists.

In his official statement on monetary policy, the RBA's governor Glenn Stevens said that improvements to the domestic economy, including moderate growth and lower unemployment figures were part of the reasoning behind the board's decision.

"As a result of the sequence of earlier decisions, monetary policy is easier than it was for most of 2011," he said. "In Australia, most indicators suggest growth close to trend overall."

According to a survey of 15 senior economists last week by the AAP, the majority of the nation's financial experts thought that another rate cut was unlikely.

This was due to a string of cuts over the last 12-months, as well as noticeable improvements in key markets such as mining and resources.

The RBA was relatively quiet on the nation's real estate sector, but the board said there were strong signs to suggest the property industry is quickly making ground on its pre-GFC growth rate.

"While it is too soon to see the full impact of those (interest rate) changes, dwelling prices have firmed a little over the past couple of months, and business credit has over the past six months recorded its strongest growth for several years," Mr Stevens said.

His comments are in line with recent figures from RP-Data Rismark and the Australian Bureau of Statistics (ABS), which also showed moderate improvements to the residential property market in both June and July this year.

The combination of relatively low interest rates and increase dwelling prices will be sure to encourage new investors back into the nation's property markets.

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