The RBA’s decision to leave rates unchanged did not meet expectations of most leading economists.

THE Reserve Bank has kept interest rates on hold after two consecutive cuts adopting a wait-and-see approach.

Against the backdrop of signs the global economy is in better shape as European officials roll out more measures to tackle the debt crisis, the RBA today decided at its monthly board meeting to keep the cash rate at 4.25 per cent.

Fresh global optimism outweighed the Reserve Bank’s concerns about the strength of the Australian dollar, weak business confidence and struggling retail and construction sectors.

The move did not meet expectations with 13 of 14 economists had tipping the RBA would cut the cash rate as an insurance policy.

The official rate was trimmed at the central bank’s November and December board meetings on fears the eurozone debt crisis was set to drag down global growth.

ANZ was the only major financial institution to predict the RBA would stay on the sidelines but it expects a rate cut in March.

Source: www.news.com.au

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