Reserve Bank of Australia keeps cash rate at 2% – as it happened

As Australia goes to the races, the RBA resisted a gamble to reduce rates. Follow the reaction to the day's other big event with Greg Jericho and Martin Farrer

4.39am GMT

Ok. That's it from me as well. Thanks for reading.

There is now a news story on this afternoon's decision here which I will update with reaction.

4.18am GMT

Well, fancy that.

The Cup winner Prince Of Penzance was the same price as the RBA increasing the cash rate by more than 0.25%, namely $100.

4.02am GMT

3.58am GMT

The ASX/S&P200 is more or less back to where it was when we started out.

After a sharp fall just after the announcement (no cut=no cheap money), it bounced back up when traders digested the fine print where Glenn Stevens gave himself room for a cut in coming months.

3.53am GMT

And so it would seem the RBA is slightly more happy about our economy than it was a month ago. And yet just to keep us all guessing it seems more willing than a month ago to lower rates if need be.

What that would suggest is that should the US Fed not lower rates, and should any economic data take a downward turn, the RBA might just be willing to cut rates at least one more time.

3.50am GMT

3.47am GMT

Looking at the statement it would seem the RBA is becoming less worried about housing prices.

In October it said that "prices continue to rise strongly in Sydney and Melbourne". Today they dropped the "strongly" adjective to make it:

Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late.

3.46am GMT

Traders not quite sure where it's going after that statement.

3.43am GMT

Ok. Back to Greg, who's been reading the statement more carefully than me.

As Martin and Stephen Koukoulas noted, the big change in the statement is the final paragraph.

At today's meeting the Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting.

Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.

3.39am GMT

But it does add:

Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.

3.37am GMT

Read the full statement from RBA governor Glenn Stevens here.

But the highlight is probably this phrase:

At today's meeting the Board judged that prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting.

3.33am GMT

Could the Melbourne Cup be as exciting?

3.30am GMT

CASH RATE STAYS AT 2%.

3.26am GMT

And lastly as ever he value of the dollar hovers over the decision. Currently the dollar is trading at around US71.71c, a bit higher than it has been of late but still well below where it has been for the past 18 months:

3.23am GMT

One factor that will be in the RBAs thinking is the moves of the big four banks to raise rate independently over the past month. The moves (as I wrote about here) were in response to new measures brought in by the financial regulator Apra.

The regulation meant banks had to raise rates if they wanted to maintain their level of profitability.

3.18am GMT

But what is going to increase demand? Today the RBA released its latest index of commodity prices and just in case you have been asleep since 2012, it reminded us all that the mining boom is done:

3.15am GMT

The other big question though is why would the RBA want to get people taking out more loans to build more houses. Yes construction is a life blood of our economy - and the housing sector is a vital part - but have you seen how much debt we're in at the moment?

The RBA recently revised its calculations for the level of household debt to disposable income. The good news was that it lowered its estimate of total debt, the bad news is its calculations show the levels of debt are rising faster than was previously though.

3.09am GMT

The drop off in dwelling approvals is broadly the same across the nation - but Victoria stands out as being one of the more severe:

3.02am GMT

A big factor for the RBA will be the housing market. Most surveys show the fire going out slightly, with price rises and auction clearing rates falling from their peaks of earlier in the year.

Yesterday the ABS released its latest building approvals figures. They also showed that the peak occurred around March this year:

2.56am GMT

The economy right now is as it has been for a couple years now - pretty flat. Employment is holding up OK (if you trust the data), and there are some smallish signs of good news if you choose to put your faith in them.

The change of government has seen consumer confidence improve. Today the ANZ-Roy Morgan consumer confidence figures showed people were more confident than they have been since the start of February 2014.

2.49am GMT

2.44am GMT

A major reason for the low inflation figures was a fall in the prices of goods we buy from overseas. The price of "tradables" - goods and services whose price is determined overseas rather than here (as for example is the case with things like health and education costs) - fell 0.3% in the past 12 months.

One of the biggest falls was in the price of communication products (which as an aside, surprised me, given the price I had to pay for my latest phone!), but also petrol fell 1.7% in the past quarter.

2.40am GMT

The big factor in play at the moment is inflation. Last week's consumer price index figures had it growing at just 1.5% - well below the RBA's 2%-3% target band.

The RBA's "core inflation" figures, which take out some of the more erratic price movements were both low as well - the trimmed mean was running at 2.1% and the weighted median at 2.2%:

2.39am GMT

Before we look at the things the RBA will be considering it is worth remembering where we are at. Even with recent rises in mortgage rates by the big four banks, the standard variable rate is still at an astonishingly low level:

2.29am GMT

The first Tuesday in November is synonymous with horse racing, but has also been associated with a number of interest rates decisions. From 2006 to 2011 the RBA either cut or raised interest rates every November. Most famously in 2007 during the election campaign it increase interest rates, which dealt the then Howard government a massive blow to its already slim chances of winning the election.

Today's decision will have little political impact - for so long have we had low interest rates that the mantra of "interest rate will always be lower under a..." has pretty much been consigned to the scrap heap.

2.27am GMT

Looks like the markets fancy No Change. The ASX/S&P200 is up 1.25% at 5,230 points after getting a bit of a hammering yesterday thanks to another bad day for bank stocks. The dollar is also up at US71.68c, suggesting traders don't expect Glenn Stevens and his cohorts to cut.

Anyway, I'm handing the main stage to Greg now.

2.20am GMT

On this day of all days it's appropriate to have a look at the betting on the RBA decision.

According to Sportsbet, the eternal runner No Change is the favourite at $1.35, followed by Quarter Point Cut at $3 and then More Than Quarter Point at $11. At the back is Quarter Point Increase at $34 and finally More Than Quarter Point Increase at $101.

2.15am GMT

Good afternoon and welcome to our live blog on the RBA's monthly monetary policy decision. After two rate cuts this year already, will the board go for the hat-trick on Melbourne Cup day?

Just a couple of weeks ago it looked unlikely. But the decision by the big lenders to increase their mortgage rates and continued low inflation has prompted some to predict that the RBA will step in and take the pressure off borrowers.