Westpac has ruled out raising interest rates before the Reserve Bank meeting next month, putting pressure on rivals to also commit to a freeze on mortgage pricing.

A surprise decision by the central bank to keep cash rates on hold has proved a setback for the big four, which had been looking to push through additional rate rises on mortgages to recoup higher funding costs.

The Australian dollar plunged nearly 1¢ to US95.74¢ after the Reserve opted to keep rates unchanged, the biggest fall in six weeks as investors lowered their expectations of future interest rate rises.

In its commentary yesterday, the bank noted overall credit growth remained ''subdued'' despite evidence suggesting there has been a greater willingness among banks to lend. The central bank also said monetary policy was delivering interest rates to borrowers ''close to their average of the past decade''.

The decision took many in the market by surprise given that recent comments by Reserve officials were widely interpreted as sending a strong signal that the bank was preparing to pre-emptively use monetary policy to curb inflationary pressures that were building from Australia's terms of trade boom.

Banks are now in a bind. Although they would be tempted to push through an out-of-cycle interest rate rise, most indicated they were likely to leave their rates steady for now.

''Interest rates are always under review but there is no immediate trigger at the moment for any change,'' the ANZ said yesterday.

National Australia Bank also said no change to its mortgage rates was looming, while Commonwealth Bank said it did not speculate on the future direction of mortgage rates.

But Westpac went a step further by saying it would defer any decisions about interest rates until after next month's Reserve Bank meeting, scheduled for November 2. "We have no current plans to change our standard variable rate ahead of next month's RBA meeting,'' a Westpac spokeswoman said yesterday.

With independent MPs holding more influence in Canberra, banks have been coming under greater political scrutiny.

The Treasurer, Wayne Swan, undertook a media blitz over the past week, sending a message that he believed the big banks had ''no justification'' to raise rates higher than any moves by the Reserve Bank.

Yesterday he went a step further, saying the government stood ready to take further action should it be required.

Westpac, NAB declare no rate rise for now

yessirreee bob .... our banksters are really soooo considerate ....

Whilst they run around wringing their hands & announcing that there will be no rate rises for the moment, no-one is watching their sleight of hand, as they busily lower their deposit rates instead. Crooks are crooks .... roll-on the class actions I say.