Reserve Bank of Australia holds cash rate steady at 4.10%

Interest rates have seen a notable increase of 4 percentage points since May of the previous year. The raise aims to create a sustainable balance between supply and demand in the economy. In light of the prevailing uncertainties surrounding the economic outlook, the Board has opted to maintain interest rates for this month, allowing more time to analyse the effects of the recent increase and the economic future, Philip Lowe, governor, RBA, said in a statement.

Inflation in Australia is on a downward trend but continues to remain high at 6 per cent. While the inflation rate in goods has relaxed, the cost of many services and rent is rising sharply. The central prediction is for CPI inflation to decrease, reaching around 3.25 per cent by the end of 2024, and returning to the 2–3 per cent target range by late 2025.

The Australian economy is in a phase of below-trend growth, a trend anticipated to persist. With weak household consumption and dwelling investment, GDP growth is forecast to be approximately 1.75 per cent in 2024, rising slightly above 2 per cent the following year.

The labour market situation is tight but has slightly eased. Unemployment is expected to rise gradually to around 4.5 per cent late next year, while wages growth has responded to the tight labour conditions.

Further tightening of monetary policy might be necessary to align inflation with the target, contingent on data and risk assessment, the statement added.

Fibre2Fashion News Desk (KD)