As expected, the Reserve Bank (RB) held the official cash rate at 8.25 percent citing a"larger-than-usual degree of uncertainty surrounding the global and domestic economies". 

The rate has risen from 7.25 percent in March this year and, before the "credit concerns" issue and the resulting moves by central banks around the world, you may have expected a further rise this time.  This is even after the RB suggested in its previous decision that the current cycle rise was over.

Latest culprits are the falling exchange rate and rising oil and dairy prices.

The RB is probably slightly thankful for the financial market turmoil as this is likely to sufficiently dampen demand and reduce inflationary pressures.  Lets only hope that it dampens demand. 

View a video of the RB governer's news conference and download the September Monetary Policy Statement.

The next OCR announcement is on Thursday 25 October.