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RBA leaves rates unchanged -

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TONY JONES, PRESENTER: The Reserve Bank has granted borrowers a reprieve, with a surprise decision
to leave interest rates unchanged; but it may be short-lived.

Today's decision not to raise rates makes the prospect of a November rate hike even more likely.
Simon Palan reports.

SIMON PALAN, REPORTER: It wasn't what most economists had in mind.

???: RBA unchanged! OK.

SIMON PALAN: Despite strong recent hints that interest rates may need to rise soon ...

BILL EVANS, WESTPAC: The Reserve Bank decided to leave rates on hold, much to the surprise of most
economists and to the market.

SIMON PALAN: A surprise to economists and a relief to mortgage holders and businesses.

GREG EVANS, CHAMBER OF COMMERCE AND INDUSTRY: It accords with our general view of the economy that
business conditions, for example, are still very slow and very subdued.

MARGY OSMOND, RETAILERS ASSOCIATION: I think retailers across the country will be heaving an
enormous sigh of relief.

SIMON PALAN: The official cash rate remains at 4.5 per cent, but the Reserve Bank may not be able
to hold the interest rate trigger for long as it tries to combat inflationary pressures from the
booming mining sector.

In a statement, the RBA governor says, "If economic conditions evolve as the board currently
expects, it is likely that higher interest rates will be required, at some point ...".

BILL EVANS: They're still leaving the probability open very much that rates will go up, it's just
that they've decided not to put them up today.

SIMON PALAN: Attention now turns to whether the retail banks will lift their interest rates,
despite today's RBA decision.

GREG EVANS: There's no justification, we believe, for the commercial banks to move outside the
official cycle.

SIMON PALAN: Today's decision helped send the Australian dollar almost a full US cent lower.

Simon Palan, Lateline.