The Reserve Bank has left the cash rate on hold at 2.5 per cent amid signs of a pickup in housing and as a slide in the currency eases pressure on the economy.
The decision came as no surprise, with the vast majority of economists forecasting that the central bank would prefer to stay put after cutting rates by 25 basis points last month.
The current easing cycle has seen the RBA cut interest rates 225 basis points since November 2011, taking the cash rate to its lowest since 1959.
‘'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,’’ RBA governor Glenn Stevens noted in a statement explaining the decision.
There are signs the central bank’s easing cycle is beginning to stimulate parts of the economy.
Home prices rose 5.3 per cent across the capital cities in the year to August 31, according to an RP Data-Rismark home value index. Sydney home prices recorded the biggest quarterly rise biggest since April 2009, it showed.
Mr Stevens noted that the Australian dollar had fallen more than 15 per cent since April, but said it remained at a high level.
‘‘It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.’’
The Australian dollar got a small lift from the RBA decision, rising about 0.2 cent to 90.15 US cents, taking it back to where it was this morning.