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The Reserve Bank of Australia has announced the outcome of its monthly board meeting.
The official cash rate has been left at a record-low 2.5 per cent as most experts had forecast.
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All 16 economists surveyed by comparison website finder.com.au had expected the cash rate to remain unchanged for the 10th consecutive month.
Mortgage Choice spokesperson Jessica Darnbrough said the Reserve Bank had taken note of the “significant drop in consumer confidence” that had occurred since last month’s federal Budget.
“In the months leading up to the federal Budget, many economists had predicted interest rates to rise in the not-too-distant future. However, this may no longer be the case,” she said.
“Instead, the Reserve Bank is likely to leave rates on hold for some time and wait and see what happens to consumer sentiment over the coming months.”
ME Bank’s general manager of markets, John Caelli, forecast that the cash rate would remain at 2.5 per cent until at least the first quarter of 2015.
“Inflation is within the target zone so the Reserve Bank can afford to wait and see the recovery unfold, noting economic growth continues to be below average, the transition to non-mining economic activity has further to go, and there will be some fiscal contraction from the Budget,” he said.
The 16 economists surveyed by finder.com.au were divided on when interest rates would rise. Nine economists said it would happen next year, five said it would happen this year, while two didn’t comment.
Ten of the economists said the public reaction to the federal Budget would delay the change in cash rate. Nine said the economy would have to stabilise before any significant cash rate changes could occur.
