RBA keeps rates on hold as inflation passes peak


* The Reserve Bank board decided on Tuesday to keep the cash rate on hold at 4.1 per cent ā€“ 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 ā€œprovide further time to assess the impact of the increase in interest rates to date and the economic outlookā€.

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

* The bankā€™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 ā€œpainful squeezeā€ 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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