A pedestrian passes the Reserve Bank of Australia (RBA) building on Monday, September 6, 2021, in Sydney, Australia.
David Gray | Bloomberg | Getty Images
central bank of australia Keep the benchmark interest rate unchanged The interest rate was adjusted to 4.35% for the eighth consecutive meeting, in line with expectations of economists polled by Reuters.
Contrary to the more dovish stance of other central banks in developed economies, the Reserve Bank of Australia wrote in a statement that “inflation has fallen sharply since peaking in 2022,” but added that underlying inflation was too high.
As a result, the bank’s forecast also sees inflation not sustainably returning to the midpoint of the 2%-3% target by 2026.
The Reserve Bank of Australia noted that the country’s overall inflation rate fell to 2.8% in the third quarter, down significantly from 3.8% in the quarter to the end of June.
However, it also noted that this was expected due to lower fuel and electricity prices in the September quarter, adding that “part of this decline is due to a temporary relief in the cost of living.” The central bank expects that as these measures arrive period, overall interest rates will rise.
Instead, the RBA pointed to Australia’s underlying inflation rate. The “truncated average” for the September quarter was 3.5%, still “some distance away” from the midpoint of the inflation target of 2.5%.
keep going, It expects the outlook to remain “highly uncertain.” The report said that if labor market conditions are stronger than expected and productivity growth remains weak, inflation may fall more slowly, limiting the case for interest rate cuts.
However, household spending may not grow as quickly as expected, which could mean inflation reaches the RBA’s target sooner.
Externally, the bank added, “Heightened geopolitical risks and potential changes in foreign trade and fiscal policy add to this uncertainty.”
