Interest rates on hold in December

“While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions in non-mining sectors over the past year”, Stevens said in a statement after the decision.

RBA governor Glenn Stevens said in a statement the official cash rate needs to accommodate more moderate economic growth.

LJ Hooker chief executive Grant Harrod applauded yesterday’s announcement saying it will help boost the economy and encourage further retail Christmas spending.

But he said despite the stable setting and a spate of recent rate rises, mortgages rates remained close to record lows, which should continue to act as an incentive for home buyers and investors.

Rates will now be on hold at least through to early February when the RBA board meets again.

As Mr Stevens was delivering his speech, the Australian Bureau of Statistics released data showing gross domestic product grew by 0.9 per cent in the September quarter.

The RBA’s decision was along expected lines.

Although the European Central Bank (ECB) is widely expected to expand its quantitative easing program at Thursday’s policy meeting, stronger inflation could prompt policymakers to opt for more moderate measures.

“There was little to excite interest rate markets overnight and yields remained essentially unchanged”, he said.

Australia’s largest commodity dropped in price to $US42.97, a drop this year of nearly 40 per cent.

A number of commentators had predicted the central bank would not make a move, preferring to keep any rate cuts up their sleeves for when they are truly needed.

Key quarterly economic growth figures are due on Wednesday, followed by inflation data in January.

The Australian dollar has surged to a six-week high in offshore trade as the Reserve Bank of Australia shows no hint of an imminent rate cut and United States manufacturing numbers disappoint.

Ms. Beacher said the combination of falling commodity prices and strength in the Aussie dollar in recent weeks might see the RBA start to “jawbone” the currency lower at a policy meeting Tuesday.