The Reserve Bank of Australia (RBA) today maintained the cash rate at a 12-year high of 4.35 per cent, opting to hold steady as it continues its battle against persistent inflation.
The decision, widely anticipated by economists and the market, marks a pause in the aggressive tightening cycle implemented since 2022 to cool the economy and bring inflation back within the RBA’s target range of 2 to 3 per cent.
Despite recent signs of moderation, the central bank reiterated its concerns about the ongoing elevated level of inflation, stating it remains “too high” and that it will be some time before it returns to the target range.
The RBA emphasised the need for vigilance against potential upside risks to inflation and indicated that interest rates will need to remain restrictive until there is clear evidence of a sustained decline in price pressures.
While core inflation, the RBA’s preferred measure, has shown signs of slowing, it still remains well above target. Additionally, the tight labour market presents an ongoing challenge for policymakers.
Today’s decision comes as other major central banks, including the Bank of England and the European Central Bank, have begun to ease monetary policy. The US Federal Reserve is also expected to follow suit in September.
RBA Governor Michele Bullock will address the media later this afternoon to provide further insights into the board’s decision-making process and outlook for the economy.
