Reserve Bank of Australia holds interest rates steady at 4.10%

05 Sep '23

2 min read

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The RBA has chosen to keep the cash rate at 4.10 per cent and the interest on Exchange Settlement balances at 4 per cent.
The decision aims to balance supply and demand while grappling with inflation and sluggish growth in the Australian economy.
Despite a tight labour market, unemployment is expected to increase to around 4.5 per cent by late next year.

The Reserve Bank of Australia (RBA) has decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances at 4.00 per cent. The Reserve Bank Board aims to establish a balance between supply and demand through elevated interest rates, which have been raised by 4 percentage points since May of last year.

The decision comes amid concerns over inflation and a period of below-trend growth in the Australian economy. Inflation is expected to decline to the 2–3 per cent target range by late 2025. However, the prices for many services and rent continue to rise, putting a strain on household budgets, governor Philip Lowe said in a statement.

The labour market remains tight, even as economic growth and employment are expected to grow below trend. This has led to a forecast of a gradual rise in the unemployment rate to around 4½ per cent by late next year.

The Board remains committed to reducing high inflation, which is seen as damaging to the economy and households. Medium-term inflation expectations remain consistent with the inflation target.

The meeting also noted uncertainties such as persistent service price inflation overseas and the lagging effects of monetary policy. Future monetary tightening may be necessary, depending on evolving data and risks. The Board pledges to closely monitor global economic developments, household spending, and inflation and labour market trends to make informed decisions.

Fibre2Fashion News Desk (KD)

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