2 weeks Ago By Rhiannon Lewin
Homeowners hoping for interest rate relief ahead of the busy Christmas season have been left disappointed, as the Reserve Bank of Australia held the cash rate on Tuesday. In Tuesday’s decision, the RBA held rates again at 4.35 per cent for the eighth time in a row.
The cash rate has remained at a 12-year high since the most recent hike last November. Know the news with the 7NEWS app: Download today In its decision, the bank’s board said underlying inflation remained too high, and was not expected to return to the target range of two to 3 per cent until 2026. “Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,” it said.
The board said the forecasts published on Tuesday were “very similar to those published in August”. “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,” it said. “Policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range.
“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.” Economists widely predicted the cash rate would remain on hold in Tuesday’s decision, given underlying inflation remained outside the RBA’s target zone. Last week’s figures showed price growth has steadily declined in recent months, with headline inflation coming in at 2.
8 per cent, back within the RBA’s 2 to 3 per cent target range, aided by government energy bill rebates. However, underlying or “trimmed” inflation is a measure of inflation without temporary price spikes and gives a truer indication of inflationary pressures and the ABS reported for the September quarter it was sitting at 3.5 per cent, although that figure was down from 4 per cent in the June quarter.
Some 38 economists were surveyed by Finder in the lead-up to the meeting, all of whom forecast the cash rate to remain steady in November. While economists at all four big banks have tipped the RBA to start slashing rates in February, traders have not fully priced in a 25 basis point cut until June. Treasurer Jim Chalmers said last week Australia was making “welcome, encouraging, hearting progress in the fight against inflation”.
“But we know that people are still doing it tough and the fight is not over yet,” he said. More to come ..
. - With AAP.
