RBA realised people expected further increase in cash rate

The Reserve Bank of Australia knew that financial participants thought it would be increasing the cash rate, according to minutes of a board meeting released this week.

The Reserve Bank of Australia (RBA) was aware that its market participants thought there would be a cash rate increase for February, according to minutes of a board meeting released this week.

But it added that "on balance, the stronger case was to leave the cash rate unchanged for the time being".

Its reason for going against all the financial predictions of a rate rise was because of an improved economic position.

However, the board is expecting the economy to "evolve" and interest rates to rise eventually, which will have an effect on credit card rates.

Nevertheless, the minutes noted that the bank's predictions are "conditional on the assumption of a gradual further increase in the cash rate", which could affect people with Aussie credit from spending on their plastic.

These views reflect forecasts made by Peter Martin, reporting for the Age, who said after the RBA maintained its rates, that there will be further hikes in the months ahead.

By James Leyfield