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RBA shocks with rates on hold
Released 5 October 2010

The Reserve Bank of Australia (RBA) has kept experts guessing by keeping interest rates on hold for the fifth consecutive month.  

The surprise, which came largely unexpected by financial experts, saw Reserve Bank Governor Glenn Stevens leave rates at 4.50%.
 
REINSW CEO Tim McKibbin was shocked by the RBA's decision.
 
“It has taken everyone by surprise – all the markets had factored in the increase and the Aussie dollar, which was marching towards parity, has dropped.

“The wild card is what the banks are going to do, as there has been speculation that they were going to put rates up higher than the RBA's decision – what is going to happen now is the great unknown."

According to McKibbin the decision not to raise rates is a reflection on how fragile the recovery is.
 
“To stomp on the recovery with an interest rate rise is counter productive. A person with a standard $300,000 is still paying $300 more now than last year as a consequence of the six interest rate rises from the reserve bank."
 
The official cash rate started the year at 3.75% with rates lifted 0.25% in March, April and May.
 
In October 2009, the RBA was the first Western Bank to lifts its cash rate since the beginning of the global financial crisis.