Reserve Bank leaves rates at 4.25%
THE Reserve Bank board kept the cash rate on hold at 4.25% for a third consecutive month on Tuesday.
Widely tipped by economists, the central bank's decision came on a day when supermarket owner Metcash announced it was planning to slash 478 jobs, and Australian Bureau of Statistics data revealed only a modest 0.2% seasonally adjusted rise in retail turnover in February.
On Monday the ABS revealed building approvals had fallen sharply in Australia in February.
Reserve Bank Governor Glenn Stevens admitted the economy was weaker, leaving the door open for future cuts.
" ... were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy," Mr Stevens said in a statement.
"At today's meeting, the board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy."
The central bank last cut the cash rate, by 25 basis points, back in December.
"Since then, (the board's) judgement has been that, with growth expected to be close to trend, inflation close to target and lending rates close to average, the setting of monetary policy was appropriate," Mr Stevens said.
But John Symond, the founder of mortgage broking company Aussie, was scathing in his assessment of the RBA's decision.
He told Sky Business the central bank had missed a "golden opportunity to instil much-needed confidence into the sagging Australian economy".
"Today we've got the greatest number of houses on the market for sale in Australia's history," he said.
"The number of vendors out there is quite scary and this is why it's taking so much longer to sell a property today.
"And that's now being reflected in prices that are cheaper than what they've been.
"We are surrounded by bad news. Australia needs confidence."
Mr Symond said it was difficult to comprehend the thinking behind the RBA's decision.
"I don't know what the Reserve Bank is looking for," Mr Symond said.
"All of the data outside the mining sector is soft. Retailers, manufacturing, new home starts ... particularly in New South Wales - the largest market in the country - is worse performing.
"So I don't know what the Reserve Bank is waiting for to trigger an interest rate cut to ensure that the Australian economy doesn't fall of the rails.
"We're hanging in at best."