Financial News: Australia Holds Rate At 12-Year High; Near Term

Australia Holds Rate At 12-Year High; Near Term Cut Unlikely

09/24/2024 - 08:25:00 (RTTNews)

(RTTNews) - Australia's central bank left its interest rate unchanged at a 12-year high for the seventh straight meeting as widely expected and vowed not to cut interest rates in the near-term as returning inflation to target remains the highest priority.

The policy board of the Reserve Bank of Australia governed by Michele Bullock decided to maintain the cash rate target at 4.35 percent.

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 kept unchanged at 4.25 percent.

Bullock said the interest rate is unlikely to be reduced in the near term.

Although inflation is set to fall further temporarily due to government measures, it is not likely to return sustainably to the target until 2026.

The board reiterated the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out.

The policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range, the bank said.

Capital Economics' economist Marcel Thieliant said the RBA did not discuss a rate hike for the first time since March. "While the risks are starting to tilt towards an earlier rate cut, we're sticking to our view that the Bank will only start to ease policy in Q2 2025," the economist added.

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