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Australia’s central bank kept interest rates at a 12-year high in a widely anticipated move and maintained a neutral stance.
RBA Sticks With Neutral Bias, Keeps Cash Rate at 12-Year High The Reserve Bank held its cash rate at 4.35% for a fourth straight meeting on Tuesday.
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“The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks,” the RBA said in a statement accompanying the decision. “The Board is not ruling anything in or out.”
The Australian dollar fell 0.4% to 66.02 US cents after the decision. The yield on policy sensitive three-year bonds fell four basis points 3.98% as swaps traders pared bets of a rate hike this year, according to data compiled by Bloomberg. All eyes will now move to Governor Michele Bullock’s press conference at 3:30 p.m. in Sydney.
The meeting came on the heels of data showing both headline and core inflation surpassed expectations in the first three months of the year and remained well above the RBA’s 2-3% target band.
It also follows a highly-anticipated decision by the Federal Reserve last week, when Chair Jerome Powell kept hopes alive for a rate cut this year while acknowledging a burst of inflation has reduced confidence that price pressures are ebbing.
The RBA looks like it may face a similar path. Bullock has previously said the bank is in data-dependent mode and will only begin reducing rates once it’s confident inflation is on track to head “sustainably” back to target.
While the RBA doesn’t publish dot plots or its own forecast track for the cash rate, Bullock has previously suggested it won’t need to wait for inflation to be inside the band before cutting. Even so, she has repeatedly pushed back against speculation of easing, reflecting the RBA’s forecasts that inflation will only return to target in the second half of 2025.
Data recently has indicated that Australia’s economy is broadly slowing with GDP contracting on a per-person basis, while tepid retail sales reflect downbeat consumer sentiment.
At the same time, the labor market remains tight with unemployment at 3.8%. Data out on Monday showed a gauge of job ads rose 2.8% in April to be up 36.5% from its pre-pandemic level.
The resilience of employment has given policymakers optimism that they can engineer a soft landing — bringing down inflation while holding onto the enormous job gains of recent years.
With assistance from Tomoko Sato and Edward Johnson.
This article was generated from an automated news agency feed without modifications to text.
