SYDNEY: Australia’s central bank on Tuesday kept interest rates steady for a third straight month at the last meeting chaired by Governor Philip Lowe, and reiterated that some further tightening may still be needed to curb inflation.
Wrapping up its September policy meeting, the Reserve Bank of Australia (RBA) held rates at 4.10%, and said recent data were consistent with inflation returning to the 2–3 percent target range in late 2025.
Markets and economists had wagered on a steady outcome after a batch of economic data - including inflation, wages and jobs - came in below expectations and offered no compelling reason to restart the tightening cycle.
Market reaction was muted reflecting the widely-expected decision, with the Australian dollar nursing earlier losses at $0.6422. The third straight pause, however, has spurred talk that the tightening cycle is over.
Lowe, who would hand over to his deputy Michele Bullock on September 18, retained a warning that some further tightening of monetary policy may be required.
“In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.”
The RBA has jacked up interest rates by a whopping 400 basis points since May last year, with the cash rate sitting at 11-year highs, but the full impact of the tightening is only being felt now as inflation eases and economic growth slows.
Data on Tuesday showed the Australian economy got a boost from net exports and government spending in the second quarter, greatly lessening the risk of a contraction in gross domestic product.
Comments
Comments are closed for this article.