RBA keeps rates on hold at 4.35%
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The news: The Reserve Bank has kept the cash rate on hold at its September meeting as it continues to remain data dependent and focused on bringing inflation back into the target band. The decision was widely expected.
The numbers: This is the seventh meeting where the central bank has kept rates on hold at 4.35%. Its last move was a 25 basis point increase in November 2023, following higher than expected inflation data.
The inflation rate has come down since that time, with CPI up 3.8% in the 12 months to the June quarter.
The context: While economists and the markets were widely expecting no change to rates on Tuesday, there has been a growing focus on when the central bank might move to easing after the US Federal Reserve's outsized 50 basis point cut.
RBA governor Michele Bullock recently said the board was not expecting to cut rates in the near-term, which has seen many push back their expectations into next year.
The board wants to see inflation coming firmly back to the 2% to 3% target band before it considers a reduction in the cash rate and has said it will look through the government's energy subsidies, which will put the headline rate back into this range but not the underlying rate.
Bullock has also indicated she will not be swayed by the actions of other central banks and is focused on the domestic economy.
Treasurer Jim Chalmers and Bullock will both deliver separate press conferences later this afternoon about the rate decision.
What they said: "Headline inflation is expected to fall further temporarily, as a result of federal and state cost of living relief. However, our current forecasts do not see inflation returning sustainably to target until 2026," the RBA board said in a statement.
"Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range."
The source: Reserve Bank Monetary Policy Decision Statement
