August 2024 Interest Rates Remain at 4.35%
At today’s meeting, the Board decided to keep the cash rate target at 4.35% and the interest rate on Exchange Settlement balances at 4.25%.
**Inflation and Economic Outlook**
– Inflation remains above target, despite falling significantly since its peak in 2022.
– The CPI rose by 3.9% over the year to June, as predicted, but underlying inflation has been persistently high for 11 consecutive quarters.
– The economic outlook is highly uncertain, with inflation expected to return to the 2–3% target range by late 2025 and approach the midpoint in 2026, which is a slower return than previously forecast.
– Factors contributing to this include higher domestic demand and weaker economic capacity to meet that demand, persistent inflation, and strong labor market conditions.
– Upside risks to inflation include high unit labor costs and persistent inflation in the services sector, while downside risks involve slow GDP growth, rising unemployment, and potential sluggish household consumption.
**Global Considerations**
– The international outlook is also uncertain, with a softened Chinese economy, volatile financial markets, a depreciated Australian dollar, and ongoing geopolitical tensions impacting supply chains.
**Priority and Policy**
– Returning inflation to target is the Board’s top priority, in line with the RBA’s mandate for price stability and full employment.
– Policy will remain restrictive until there is confidence that inflation is moving towards the target range.
– The Board will continue to monitor global and domestic economic trends, inflation, and labor market conditions, and will take necessary actions to achieve the inflation target.
2024 RBA Policy Announcements
A reminder that the schedule of RBA meetings has changed from 11 in a year to 8, held 5-7 weeks apart. Monetary Policy Announcements will be made at 2.30pm on the following days:
• 24 September
• 5 November
• 10 December
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