The Reserve Bank has left the cash rate on hold at 4.1 per cent for the fourth month in a row but has not ruled out future increases to return inflation to target.
Key points:
- The RBA has not increased the cash rate since June this year when it increased it to the current rate of 4.1 per cent
- Economists had not expected the RBA to lift rates at its meeting but believe a hike is likely before Christmas
- Tuesday’s meeting was Michele Bullock’s first as RBA governor after taking over from Philip Lowe last month
It is the fifth time the RBA has paused its current rate hiking cycle since May 2022, when it began lifting rates to reduce high inflation, and leaves the cash rate at its highest level since April 2012.
Tuesday’s board meeting was the first under new governor Michele Bullock, who succeeded Philip Lowe last month.
The RBA’s decision to leave rates unchanged was in line with what financial markets and economists had expected, despite inflation rising slightly to 5.2 per cent in August, up from 4.9 per cent in July.
It was the first time monthly inflation had increased since April, due to a surge in fuel prices contributing to higher transport costs, along with rising housing, food and insurance prices. Underlying inflation, however, still declined.
In her first statement as RBA governor, Ms Bullock repeated past statements by Mr Lowe that future rate rises may be needed to combat inflation.
“The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” Ms Bullock said.
“In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.
(ABC)
