RBA makes cash rate decision

The RBA has left the cash rate unchanged at 2.0 per cent at its October board meeting.

Westpac chief economist Bill Evans is predicting no moves in the cash rate for the foreseeable future, and says there has been an overreaction to worries about the Chinese economy.

"We are predicting a more stable global environment in 2016," he said.

HSBC Australia chief economist Paul Bloxham said the falling Australian dollar will save the RBA from cutting the cash rate.

Also read: Aussie dollar up ahead of RBA interest rate decision

The Australian dollar has dropped 14 US cents since the beginning of the year, and is nine per cent weaker against a basket of currencies representing its major trading partners.

Tim Lawless, head of research, CoreLogic RP Data said the flat rate of growth across the Sydney housing market last month, together with a slowdown in investment related mortgage activity was not enough to sway the RBA into another interest rate cut this month. 

Also read: RBA unlikely to cut cash rate again

"We saw the rate of capital gain flatten out across the Sydney housing market during September, however the trend rate of growth remains very strong, with Sydney values almost 17% higher over the past twelve months and 4.6% higher over the September quarter," Lawless said.

"In contrast, Australia’s second largest housing market has gathered some momentum over the past quarter, outperforming Sydney with a 2.4% rise in dwelling values last month and a 7.4% shift over the quarter."

Statement by Glenn Stevens, Governor: Monetary Policy Decision

"At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.

"The global economy is expanding at a moderate pace, with some further softening in conditions in China and east Asia of late, but stronger US growth.

"Key commodity prices are much lower than a year ago, in part reflecting increased supply, including from Australia. Australia's terms of trade are falling.

"The Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease policy.

"Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired.

"Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative.

"In Australia, the available information suggests that moderate expansion in the economy continues.

"While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year.

"Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate."

"In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending.

"Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months.

"Dwelling prices continue to rise strongly in Sydney and Melbourne, though trends have been more varied in a number of other cities.

"Regulatory measures are helping to contain risks that may arise from the housing market. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved lower and been more volatile recently, in parallel with developments in global markets.

"The Australian dollar is adjusting to the significant declines in key commodity prices."

"The Board today judged that leaving the cash rate unchanged was appropriate at this meeting.

"Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target."