Steady as she goes. That appears to be the philosophy of the Reserve Bank, who today decided to keep interest rates on hold – the cash rate remains at 3.5%.

With cuts in May and June totaling 75 basis points, the majority of economists surveyed prior to the announcement predicted this result.

“The RBA is not rushing to cut rates again in July, especially as unemployment remains low and GDP is back growing at an above-trend rate.” says Barclay Economist Kieran Davies. “A sharp deterioration in the European outlook may yet force a cut, but our central case is that rates remain steady at 3.5%.”

With inflation remaining within the Reserve Bank’s target band and survey data from TD Securities showing that consumer prices actually fell 0.2 per cent last month, all signs show that Australia’s economic growth and employment model remain comparatively strong.

Good news for homeowners as well, with the biggest rise in home prices since March 2010. The RP-Data-Rismark Home Value Index recorded a 1% increase in home values across the eight capital cities in the month of June, partially reversing a 5.3 % fall over the last 12 months to May. Mark Bouris from Yellow Brick Road reiterates this good news, stating yesterday that real estate is more affordable as rates stay on hold or continue going down, with the opportunity of big returns and capital growth over the long term.