2 weeks Ago By Matt Mckenzie
The Reserve Bank has kept the country’s official interest rate on hold at 4.35 per cent and warned that returning inflation to target is still the priority. “Sustainably returning inflation to target within a reasonable timeframe remains the board’s highest priority,” the bank’s board said in a statement.
“While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high. “The November (RBA) forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint. “This reinforces the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out.
” The official interest rate had been unchanged at 4.35 per cent for a full year prior to today’s meeting. Daniel Newell Markets had overnight predicted just a 5 per cent chance of a cut.
VanEck head of investments Russel Chesler said investors were more or less unanimous that the RBA would hold at the November meeting. “The Australian economy has proven remarkably resilient to downward pressure, however we’re encouraged to see the slow-yet-steady progress in bringing down the inflation rate,” Mr Chesler said. On Monday, Judo Bank chief economic advisor Warren Hogan said the RBA would likely not move rates until late in 2025.
“We now expect the RBA to be on a ‘long hold’ right through the year ahead,” Mr Hogan said. “We see no compelling case for a rate cut, as inflation remains above the RBA’s target and the labour market is beyond full employment.” Matt Mckenzie Kim Macdonald The RBA has made major inroads in the fight against rising prices, with underlying inflation down 0.
5 percentage points to 3.5 per cent in the year to September. Headline inflation fared better thanks to a big suite of Government subsidies and dropped to 2.
8 per cent, in the bank’s target zone. The RBA will ignore the temporary effects of those policies, however. The International Monetary Fund warned in recent weeks that Australia could fall behind the pack on the inflation fight, predicting prices would rise 3.
3 per cent next year. Unemployment has remained close to record lows while the jobs market has shot the lights out — more than 430,000 workers were hired in the past year. More to come.
