Financial News: Australia Keeps Interest Rate Unchanged

Australia Keeps Interest Rate Unchanged

(RTTNews) - The Reserve Bank of Australia maintained its key interest rate as the full effects of earlier rate cuts are yet to be felt and policymakers became cautious after data showed evidence of more persistent inflation.

The policy board governed by Michele Bullock decided to hold the cash rate at 3.60 percent, as widely expected, on Tuesday.

The bank had reduced the rate by 25 basis points each in August, May and February. The current 3.6 percent is the lowest since March 2023.

Policymakers observed that some inflationary pressure may remain in the economy.

"With private demand recovering and labour market conditions still appearing a little tight, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting," the bank said.

Further, the Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve. In the statement on monetary policy, the bank said underlying inflation is set to be above the 2-3 percent range until the second half of 2026, reflecting the strong September quarter outcome.

Headline inflation is forecast to remain above 3 percent for much of 2026, before returning to be a little above the mid-point of the target range, the bank said. GDP growth is projected to stabilize around the economy's potential growth rate.

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