Kieran Bicheno

Interest rates kept on hold at 2%

THE Reserve Bank of Australia  has left the cash rate unchanged at 2% at its board meeting today.

The board sited low commodity prices, falling terms of trade and softening conditions in the Asian region for the decision.

Governor  Glenn Stevens said he expects they will start increasing the policy rate over the period ahead.

"Low interest rates are acting to support borrowing and spending," Mr Stevens said. 

"While the recent changes to some lending rates for housing will reduce this support slightly, overall conditions are still quite accommodative."

Rates have been held at the historic low of 2% since May. 

"Credit growth has increased a little over recent months, with growth in lending to investors in the housing market easing slightly while that for owner-occupiers appears to be picking up.

"Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late. Growth in dwelling prices has remained mostly subdued in other cities."

Most economists had predicted the RBA was unlikely to hand down a November rate cut, but said it was a very close call.