RBA Keeps Cash Rate Unchanged at 4.35% Amid Persistent Inflation Concerns
In its latest meeting, the Reserve Bank of Australia (RBA) decided to keep the cash rate unchanged at 4.35%, and the interest rate paid on Exchange Settlement balances at 4.25%. The decision comes as inflation remains persistently high, though it has eased since its peak in 2022. Despite some progress, inflation remains above the RBA’s target range of 2-3%, and forecasts predict it may not return to target until 2026. Underlying inflation, measured by the trimmed mean, was 3.9% for the year ending in June 2023, indicating inflation has not eased as quickly as desired.
Economic growth has been weak, with GDP data from the June quarter confirming a slowdown. Real disposable incomes have fallen, and financial conditions remain tight, affecting consumer spending, particularly discretionary spending. However, temporary residents, including students and tourists, have contributed to some resilience in aggregate consumer demand.
Labour market conditions are still tight, with employment growing by 0.3% per month on average in the three months leading up to August. While the unemployment rate has risen slightly to 4.2%, the participation rate remains at record highs, and job vacancies continue to be elevated.
The outlook remains highly uncertain, both domestically and globally. Wage pressures have eased, but labour productivity is only at 2016 levels. Global factors, such as a softer Chinese economy and geopolitical risks, further contribute to uncertainty. The RBA’s central priority remains to return inflation to its target range in a sustainable manner, and it will maintain restrictive monetary policies until there is greater confidence that inflation is under control.
While inflation has declined in the short term, underlying inflation is still a concern, and the RBA continues to monitor economic data closely.
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:
• 5 November
• 10 December
Our Services
Please visit our website for more information regarding.
Home Loans
Commercial Loans