Financial News: Australia Holds Interest Rate At 13-Year High

Australia Holds Interest Rate At 13-Year High

11/05/2024 - 00:59:00 (RTTNews)

(RTTNews) - Australia central bank maintained its interest rate for the eighth straight session at a 13-year high on Tuesday as underlying inflation remains too high.

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

The bank had previously changed its rate 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.

The committee said it needs to remain vigilant to upside risks to inflation and is not ruling anything in or out.

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

Policymakers observed that headline inflation has declined substantially and it will remain lower for a time but underlying inflation is more indicative of inflation momentum, and it remains too high.

The bank said it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.

In Statement of Monetary Policy, the bank said year-ended headline inflation is forecast to rise in the September quarter of 2025 to above the target band as the rebates unwind. Underlying inflation is not expected to reach 3 percent until the June quarter of next year.

Economic growth is expected to return to around its potential growth rate by late 2025.

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