Aerial view of the central business district and the Sydney Opera House on February 17, 2023.
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Australia’s central bank left its official cash rate unchanged at 4.10% in a closely watched decision on Tuesday.
Economists were divided on expectations ahead of the decision, with 16 of 31 respondents surveyed by Reuters forecasting a gain of 25 basis points and 15 expecting the central bank to stay flat.
cheering stocks The move comes as the central bank says inflation in the economy has “passed its peak”. The S&P/ASX 200 reduced previous losses and increased by 0.5%. The Australian dollar weakened 0.25% to 0.6652 against the US dollar.
“It may be necessary to further tighten monetary policy to ensure inflation returns to target within a reasonable time frame, but that will depend on how the economy plays out,” said RBA Governor Philip Lowe. economy and inflation”. declare.
“Inflation is still too high and will stay that way for some time,” he said.
Australian Bureau of Statistics monthly inflation shows some signs of cooling off in price appreciation at 5.6% for Mayled by prices for housing, food and non-alcoholic beverages.
Australia’s monthly inflation peaked at 8.4% in December. The economy’s consumer price index increased by 7% in the first quarter of 2023.
The decision comes after the central bank raised the cash rate by 25 basis points last month – a move described as a “well-balanced” decision, according to the report. Minutes from the June meeting.
‘Time to judge’
“This month’s decision to keep rates steady gives the Board more time to assess the health of the economy and the economic outlook and associated risks,” Lowe said in a statement on Tuesday. mandarin.”
He added that the central bank will continue to closely monitor developments in the global economy, household spending trends and inflation forecasts.
According to IG Australia market analyst Tony Sycamore, the central bank’s decision to leave rates unchanged was to “assess” the impact of multiple rate hikes to date.
Sycamore told CNBC: “The RBA’s decision to leave rates unchanged today is partly based on reasons such as those that prompted the pause in April – to assess the impact of a 400 bp rate hike. accumulated in the past 14 months”.
He added that the central bank now appears to be less concerned with wage growth, pointing to the wording of Lowe’s statement.
“At an overall level, wage growth remains in line with the inflation target, provided that productivity growth picks up,” the central bank governor said in the announcement.
Ahead of the decision, Commonwealth Bank of Australia senior economist Belinda Allen said the next consumer price index report would be closely watched.
“The data stream has been mixed up lately, and we thought this would give the RBA time to slow down its hiking cycle,” says Allen.
