RBA keeps rates on hold as inflation passes peak

RESERVE BANK KEEPS RATES ON HOLD

* The Reserve Bank board decided on Tuesday to keep the cash rate on hold at 4.1 per cent ‚Äď the third such decision in a row after 400 basis points of hikes since May 2022.

* The board says the series of rate hikes is working to balance supply and demand in the economy, but holding steady will ‚Äúprovide further time to assess the impact of the increase in interest rates to date and the economic outlook‚ÄĚ.

* Inflation has passed its peak but is still too high, especially the cost of services and rent.

* The bank’s central forecast is for CPI inflation to continue to decline and to be back within the two- to three-per cent target range in late 2025.

* Below-trend growth in Australia is expected to continue for a while.

* The unemployment rate is expected to rise gradually to about 4.5 per cent late next year.

* Wages growth has picked up over the past year, but is still consistent with the inflation target, provided productivity growth picks up.

* The outlook for household consumption remains uncertain, with many households experiencing a ‚Äúpainful squeeze‚ÄĚ on their finances, while some are benefiting from rising housing prices and higher interest on savings.

* Globally, there is increased uncertainty about the outlook for the Chinese economy because of ongoing stresses in the property market.

* More tightening of monetary policy may be needed to ensure inflation returns to target in a reasonable time, but that will depend on the data and the ongoing assessment of risks.

 

Paul Osborne
(Australian Associated Press)

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