The board's decision came despite the majority of financial experts predicting a cash rate reduction of 25 basis points in response to a declining building sector, as well as rising unemployment and poor retail sales.
The board's decision came despite the majority of financial experts predicting a cash rate reduction of 25 basis points in response to a declining building sector, as well as rising unemployment and poor retail sales.

HIA hurt over rates freeze

THE decision by the Reserve Bank of Australia to keep interest rates on hold has denied the building and construction sector the opportunity to boost business confidence, according to a leading industry body.

Chief economist for the Housing Industry of Australia (HIA) Harley Dale believes that a rate cut announcement would have been appropriate for the current economic conditions.

"The global and domestic economic outlook remains clouded, within which new housing activity in Australia faces the risk of revisiting GFC lows," Dr Dale said yesterday (February 7).

The board's decision came despite the majority of financial experts predicting a cash rate reduction of 25 basis points in response to a declining building sector, as well as rising unemployment and poor retail sales.

The latest Australian Industry Group Performance of Construction Index results indicates that the sector contracted for the 20th consecutive month in January.

"Against this backdrop, leaving rates unchanged has the potential to weigh down on confidence and non-resource economic activity," Dr Dale added.

The RBA board will next meet on March 6.


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