Australia is blessed with the central bank most reluctant to lower rates in the world, but even so, of late it has not been able to resist the pressure up until now. But today was different. From Reserve Bank keeps rates on hold for a second month running.

Bucking the global trend toward zero official interest rates for a little longer, the Reserve Bank of Australia board today decided against cutting interest rates for the second time this year, opting to wait until first quarter inflation figures are released later this month.

The RBA board controversially cut the official cash rate to 2.25 per cent in February — ending a near-record 18 months of official rate stability — and strongly hinted it would cut rates again this year to help revive Australia’s flatlining economy in the wake of the resource boom.

Instead, as it did last month, the RBA today left the cash rate unchanged – keeping it at a record low of 2.25 per cent.

Lowering rates would be a catastrophic blunder. The dead-in-the-water nature of other economies who have tried to stimulate through lower rates ought to be a major warning. That the RBA even understands why they should not lower rates makes its previous decisions inexplicable, unless there had been pressure from Treasury or the Government.

The next change ought to be upwards and not down.