You have 0 free articles left this month.
Register for a free account to access unlimited free content.
Powered by MOMENTUM MEDIA
accountants daily logo

RBA announces interest rate decision amid easing inflation

Business

The Reserve Bank has revealed its cash rate decision for Cup Day as inflation begins to break into the RBA's target range.

By Miranda Brownlee 11 minute read

The RBA has decided to again keep the cash rate target unchanged at 4.35 per cent following its latest board meeting.

This was widely predicted with all of the economists and commentators featured on comparison website Finder predicting that rates would stay on hold.

RSM Australia economist Devika Shivadekar said inflation is easing in line with expectations with headline inflation breaking into the upper end of the RBA's target range in the latest quarter.

"However, persistent labour market tightness limits the RBA’s flexibility to ease. Holiday season spending could indicate whether demand is sustainably strong or just temporary, impacting RBA’s rate plans well into 2025," said Shivadekar.

AMP chief economist Shane Oliver agreed that inflation is likely still too high for the RBA to begin cutting.

"It is falling and likely to continue to do so resulting in a start to rate cuts in February next year," he said.

==
==

"A December cut is still possible but would need to see a further sharp fall in underlying inflation in October monthly data along with a renewed rise in unemployment."

CreditorWatch chief economist Ivan Colhoun said that some board members may be growing more concerned about the risk of the monetary policy continuing to underachieve on the inflation target, particularly with the unemployment rate still relatively low.

"On hold rates will likely not be welcomed by those struggling under high interest rates and high cost of living, however, the Board has been clear that Australian interest rates will remain high until it has greater confidence that inflation will return to target," said Colhoun.

Moody's analytics' Leanne Pilkington agreed that while many consumers may have been hoping for a rate cut prior to Christmas, it appears the RBA is set on waiting for a consistent downward trend in inflation to materialise.

"The signs are there though, so a rate reduction is warranted in the near term."

Miranda Brownlee

Miranda Brownlee

AUTHOR

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: miranda.brownlee@momentummedia.com.au
You are not authorised to post comments.

Comments will undergo moderation before they get published.

accountants daily logo Newsletter

Receive breaking news directly to your inbox each day.

SUBSCRIBE NOW