RBA keeps rates on hold at 4.35%
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The news: The Reserve Bank has kept interest rates on hold at 4.35% for its final meeting of 2024.
This was widely expected by economists and the markets, with the first rate cut expected at some point in early-2025.
The numbers: The RBA has held rates on hold since it last raised rates by 25 basis points in November 2023.
Underlying inflation is around 3.5%, which is above the 2% to 3% target range and the 2.5% midpoint of the band.
The context: The central bank will be waiting to see labour force data, due to be released on Thursday, and the next quarterly inflation figures.
The meeting minutes from this December board meeting will be released on 24 December.
The board has, however, indicated that it is increasingly confident that inflationary pressures are declining in line with its expectations to be back towards 2.5% by 2026. It flagged that its central projection for growth in household consumption to increase as income growth lifts.
So far, the September quarter data indicated income and consumption were growing more slowly than anticipated but there's indication of an October and November lift in consumption.
What they said: "While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high," the Reserve Bank board said in a statement.
"The November [statement on monetary policy] forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.
"Recent data on inflation and economic conditions are still consistent with these forecasts, and the Board is gaining some confidence that inflation is moving sustainably towards target."
The source: Reserve Bank statement
