THE Reserve Bank of Australia has opted to maintain interest rates at their current level, a move widely expected and likely met with relief by borrowers grappling with escalating expenses and interest rates.
Following the bank’s initial two-day meeting of 2024, board members elected to keep interest rates steady at 4.35 per cent. Analysts had generally foreseen this decision, given a positive streak of economic data, which included lower-than-anticipated inflation figures, reduced spending, and a softening job market.
Despite a significant 4.25 percentage points tightening of monetary policy since May 2022, aimed at tempering the economy and curbing inflation, discussions have shifted towards the possibility of rate cuts.
However, Governor Michele Bullock, leading the board, hinted at the potential necessity for further interest rate hikes, though her assessment of the economy was somewhat more upbeat compared to her previous remarks in December.
In its statement, the board indicated that it may take some time before inflation stabilises within the target range, and the optimal trajectory of interest rates hinges on ongoing data evaluation and risk assessment.
In a press conference to communicate the RBA’s decision, Bullock said while February’s decision was held steady, the board felt inflation was still too high.
“The inflation rate still has a ‘4’ in front of it. It’s fair to say the board does understand that people are doing it tough,” she said.
“And a big reason for that is inflation. That’s why it’s really important we get inflation down.
Bullock said while “good progress,” has been made, “There is more work to do. The job’s not done. And the best thing that we can do with our tool is help households deal with the cost of living by getting inflation down. That’s our aim.”