RBA Holds Rates Steady 4.35% Amid Persistent Inflation and Economic Uncertainty

RBA Holds Rates Steady 4.35% Amid Persistent Inflation and Economic Uncertainty

The Board has decided to keep the cash rate target steady at 4.35%.

Inflation, while lower than its 2022 peak, is still high. Over the year to September, headline inflation fell to 2.8%, largely due to decreases in fuel and electricity costs. Underlying inflation, however, stands at 3.5%, above the 2.5% midpoint target, with sustainable levels not expected until 2026.

Economic growth remains weak, with tight financial conditions and reduced real disposable incomes limiting household spending. Aggregate consumer demand, including spending by temporary residents, remains resilient, but underlying inflation persists due to demand outpacing supply.

Labour market conditions remain tight despite slight easing, with the unemployment rate at 4.1% in September and stable participation and vacancy rates. Wage growth has moderated, though productivity remains stagnant at 2016 levels.

The Board views current policy as restrictive, aligning with its goals, yet remains cautious about uncertainties. Household consumption growth may increase, but a slower-than-expected recovery could dampen growth and pressure the labour market. Additionally, the delayed effects of monetary policy and weak productivity complicate the outlook.

Global uncertainty remains high. Many central banks are cautiously relaxing policy as inflation trends towards targets, but risks persist. In China, economic policies are being adjusted to stimulate growth, though their effects remain unclear amid ongoing geopolitical issues.

The Board’s top priority is to ensure inflation returns to target sustainably, aligned with the RBA’s mandate. While headline inflation has decreased, underlying inflation indicates persistent momentum. The November forecasts reinforce the need for vigilance. The Board will continue to adjust policy as necessary, guided by global economic trends, financial market developments, and domestic inflation and labour conditions.

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:

  • December 3, 2024
  • February 4, 2025
  • March 4, 2025
  • April 1, 2025
  • May 6, 2025
  • June 3, 2025
  • July 1, 2025
  • August 5, 2025

Our Services

Please visit our website for more information regarding.

Home Loans

Commercial Loans

Share

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.