Reserve Bank keeps rates on hold
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The news: The Reserve Bank has kept interest rates on hold at its second-to-last meeting for the year. This was widely expected by economists who were more focused on changes to the tone of the central bank's post-meeting statement.
The numbers: The RBA has kept rates on hold at 4.35% for a year. The last increase was a 25 basis point rise in November 2023 following higher than expected inflation data.
The RBA's next board meeting runs from 9 to 10 December.
New forecasts published by the RBA do not expect inflation to return towards 2.5% until 2026.
The context: While headline inflation has returned to the target band this is largely due to government cost of living measures, such as energy subsidies, and the RBA still thinks inflation needs to come down further before it is comfortable to begin easing.
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 RBA board said in its post-decision statement.
"... Policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range.
"... A range of indicators suggest that labour market conditions remain tight, and while conditions have been easing gradually, some indicators have recently stabilised."
The board continued to say it was "not ruling anything in or out".
The source: RBA Monetary Policy Decision Statement
