RBA keeps interest rate at 4.75% for February

The floods in Queensland are one reason for RBA's decision, it has revealed.

The Reserve Bank of Australia (RBA) has opted to maintain the interest rate at 4.75 per cent for February.

This news should be welcomed by homeowners across Australia and particularly those experiencing difficulty due to the floods in Queensland and parts of Victoria.

And the natural disaster played a part in the minds of the RBA, who stated the "temporary adverse effect" of the issue, along with low inflation, were two reasons why the organisation opted to maintain the cash level.

What's more, this comes after the RBA chose to keep rates the same over the Christmas period and for the whole of December.

However, the last cash level rise came in November when the rate increased by 0.25 per cent from 4.5 per cent to 4.75 per cent, which lead the Commonwealth Bank to up the levels on its home loans and savings accounts, much to the dismay of homeowners in the country.

Talking about the floods in Australia, RBA governor Glenn Stevens said in a statement this week (February 1st): "Over the next year or two, the efforts to repair or replace infrastructure and housing will add modestly to aggregate demand, compared with what would otherwise likely have occurred.

"The extent of this net additional effect will depend on the full extent of the damage, the speed of the rebuilding and the extent to which other public and private spending is deferred."

In addition to this, he pointed out it was important for the bank to assess whether the demand from rebuilding after the natural disaster will have a big impact on the medium-term outlook for inflation.

Earlier in the statement, Mr Stevens revealed the RBA expects inflation throughout the year ahead to be between the two to three per cent target, also stating a further increase in employment growth is likely over the coming year.