- Prior 4.10%
- The decision to hold rates unchanged provides further time to assess the impact of the increase in interest rates to date and the economic outlook
- Inflation in Australia is declining but is still too high
- Household consumption growth is weak
- Conditions in the labour market remain very tight, although they have eased a little
- Returning inflation to target within a reasonable timeframe remains the priority
- Recent data are consistent with inflation returning to the 2–3% target range over the forecast horizon
- The outlook for household consumption is an ongoing source of uncertainty
- Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks
- Full statement
The extended pause today fits with what markets have roughly priced in, as there were about 66% odds of there being no change today. The aussie is slightly weaker after the decision as the remaining balance is reacting to the decision but when all is said and done, the RBA is still keeping the door open to tighten further if need be.
However, they also added a slight hint that they may be done with rate hikes altogether as well (or at least that is the way I see it). In July, they noted that:
"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve."
Today, they said that:
"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks."
In other words, they are still more or less alluding to being data dependent. But all else being equal and if the recent trend continues, they could very well stay on the sidelines and watch inflation developments play out for the remainder of the year.
