The Reserve Bank of Australia (RBA) has left the official cash rate unchanged at 4.35 per cent, opting to wait for further evidence that inflation is easing despite signs of a slowing economy.
The decision was unanimous and means interest rates will remain at their current level until at least the RBA’s next meeting in August.
The move follows recent economic data showing weaker growth and a rise in unemployment. However, the central bank said underlying inflation remains too high to justify a rate cut at this stage.
In a statement, the RBA said recent rate rises had tightened financial conditions and were beginning to have the desired effect on economic activity.
“Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected,” the board said.
“But inflation is still too high and the board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.”
The RBA also pointed to ongoing uncertainty in the global economy, including instability in the Middle East, as a factor in its decision-making.
“Resolution of the conflict in the Middle East is at an early stage, and there are plausible scenarios where inflation is higher and activity lower than envisaged under the May baseline forecasts,” the board said.
The Reserve Bank will next meet on 10–11 August to reassess the outlook for inflation, employment and economic growth.
Source: ABC News
