Financial News: Australia Central Bank Keeps Rate Unchanged As Expected

Australia Central Bank Keeps Rate Unchanged As Expected

12/10/2024 - 01:48:00 (RTTNews)

(RTTNews) - Australia central bank left its key interest rate unchanged for the ninth straight session on Tuesday but today's statement lifted hopes of an early interest rate cut.

The policy board of the Reserve Bank of Australia governed by Michele Bullock decided to retain the cash rate target at a 13-year high of 4.35 percent. The decision matched expectations.

The previous change in the interest rate was in November 2023, when it was lifted by 25 basis points to the highest level since late 2011.

The interest rate paid on Exchange Settlement balances was maintained at 4.25 percent.

The board said it is gaining some confidence that inflation is moving sustainably towards target. The board reiterated that the Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions.

"The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome," the bank said.

Policymakers observed a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labor market.

The first interest rate cut won't come until the Bank's May meeting, Capital Economics' economist Marcel Thieliant said. The economist expects only a cumulative 75 basis points of easing.

The economist noted that the RBA will want to see a further loosening of the labor market before cutting interest rates.

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