RBA leaves cash rate on hold

THE Reserve Bank has left the cash rate on hold at 3.5%, indicating it was too soon to determine whether previous cuts on Australia's housing market.

RBA Governor Glenn Stevens said with inflation within the 2-3% target band, the board saw no need to move the cash rate.

Declining commodity prices had contributed to keeping inflation under control, he said.

The RBA's move had been widely tipped by economists, with most still predicting a cut before the end of the year, probably in December.

Mr Stevens said house prices in Australia had firmed slightly in the past couple of months.

He also pointed to business credit, which he said had recorded its strongest growth in years over the past six months.

Europe continues to be of concern, with Mr Stevens predicting it would "remain a potential source of adverse shocks for some time".

The RBA last cut the cash rate in June (25 basis points) before leaving it on hold in July.

The board's statement can be found here.

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