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RBA leaves rates unchanged
Released 7 December 2010

The Reserve Bank of Australia (RBA) has given home owners an early Christmas present leaving rates on hold at 4.75%.

The decision to leave rates unchanged followed the shock announcement on Melbourne Cup Day (2 November) of a 25 basis point increase in rates, just the fourth rise of the year.

“Since the previous Board meeting, concerns about the creditworthiness of a number of European governments have again become the main focus of financial markets, with a marked rise in sovereign bond spreads for some euro-area countries and an increase in volatility," RBA Governor Glenn Stevens said in his statement on monetary policy.

“Following the Board's decision last month to lift the cash rate, and the subsequent increases by financial institutions, lending rates in the economy are now a little above average. The Board views this setting of monetary policy as appropriate for the economic outlook,” he added.

REINSW CEO Tim McKibbin said the Reserve Bank has realised any additional increases in interest rates would adversely affect people's ability to finance debt and have an adverse effect on the economy in general.

"People's ability to serve debt is the lifeblood of the economy and inhibiting or restricting people's ability to service it will have adverse affects on the the economy including the property market. This is particularly good news for people who have existing debt financing arrangements coming into Christmas when there are additional pressures on the family budget."

The official cash rate started the year at 3.75% with rates lifted 0.25% in March, April, May and November.

The RBA board does not meet in January, unless an extraordinary meeting is called.