Australia Keeps Key Rate Unchanged At 12-Year High
(RTTNews) - Australia's central bank left its interest rate unchanged at a 12-year high for the sixth consecutive meeting and damped market expectations for a near term rate cut as it emphasized the need to keep the policy sufficiently restrictive to bring inflation to the target.
As widely expected, the policy board of the Reserve Bank of Australia headed by Michele Bullock decided to hold the cash rate target at 4.35 percent. The previous change in the interest rate was in November 2023, when it was raised by a quarter-point to the highest level since late 2011.
The interest rate paid on Exchange Settlement balances was also kept unchanged at 4.25 percent.
Policymakers observed that the economic outlook is uncertain and recent data have demonstrated that the process of returning inflation to target has been slow and bumpy.
The bank repeatedly said that returning inflation to target within a reasonable timeframe remains the Board's highest priority.
The RBA also reiterated that data have reinforced the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out.
The policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range, the bank added.
Capital Economics' economist Abhijit Surya said the central bank continued to strike a cautious tone today, but the next move will be down. That said, economist expects the RBA to cut rates only in the first half of next year.
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