Shock Horror! - Reserve Bank keeps rates at 3.75%

Well it appears no one can pick the Reserve Banks Intentions. Will be interesting to see the minutes when they are released in a couple of weeks.

All the data seemed to lean towards an increase in rates (data that has been reported here)
US GDP up in December: +1.4% for the quarter
Aus CPI up in December: +2.1%
Aus PPI down in December: -1.5%
Car sales up in December: +3.3%
House Price Index up in December: +5.2% in the quarter, +13.6% over the year.

The only factors that went against the increase was the PPI going down and the CPI being moderate. In fact, using the preferred measures of the weighted mean (down 0.1%) and trimmed mean (no change) means that inflation was obviously not enough to excite the mandarins at the Reserve.
Also the fact that the big banks increased their rates higher than the Reserve bank change seemed to stay the Reserves hand. For example, Westpac increased its standard variable mortgage rates by 0.45% (as opposed to the rise of 0.25 on the cash rate by the Reserve). This might have given the reserve pause. Indeed in the press release about the non change, the Governor of the Reserve Bank alluded to this commercial bank action. From the rba website

"With the risk of serious economic contraction in Australia having passed, the Board had moved at recent meetings to lessen the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. Lenders have generally raised rates a little more than the cash rate over recent months and most loan rates have risen by close to a percentage point. Since information about the early impact of those changes is still limited, the Board judged it appropriate to hold a steady setting of monetary policy for the time being."

Thanks Westpac!