On Tuesday 1st April the Reserve Bank of Australia (RBA) made the decision to leave the official cash rate unchanged.  While this was the outcome many analysts expected it still comes as pleasant news to mortgage holders.  The official cash rate is now sitting at a 12 year high of 7.25% and according to Allen Oster, Chief Economist of National Australia Bank, we are likely to see rates remain on hold for now and a possible reduction in early 2009.

RBA Governor Glenn Stevens has said in a recent statement that credit demand has slowed somewhat and business and consumer sentiment has softened.  This leads analysts to believe that the RBA intends to leave rates on hold.  

In an interview on ABC News Radio Allen Oster said that another rate rise is possible in May if we receive bad CPI figures, but the economy is softening and as a result rates should remain on hold for along time and then in 2009 we should see a reduction.

Chief Economist for ANZ Saul Eslake expects rates to remain on hold for the rest of the year.

"Today's statement says that even though the March quarter CPI is likely to show a further rise in rates of inflation, the board nonetheless thinks that monetary setting is appropriate for the time being," he said.

"That I think is Reserve Bank code for interest rates are on hold for the foreseeable future."