The Reserve Bank of Australia holds interest rates steady
The Reserve Bank of Australia has decided to keep interest rates at 4.1% for the second consecutive month. This is good news for mortgage holders, as the central bank wants more time to assess the impact of previous rate hikes.
Inflation in Australia has slowed down to 6% in the second quarter, although it remains higher than the RBA’s target range of 2% to 3%.
Governor Philip Lowe stated that the higher interest rates are helping to establish a more balanced supply and demand in the economy. Due to uncertainties surrounding the economic outlook, the board has chosen to maintain the current interest rates for further evaluation.
Australian economy faces inflation challenges
The Australian central bank has raised interest rates by a total of 400 basis points since May of last year, reaching its highest level in 11 years. This increase was prompted by a surge in inflation as economic activity rebounded after the peak of the Covid-19 pandemic.
Although goods price inflation has eased, the prices of many services, including rent, are rising rapidly. Governor Lowe expects consumer price index (CPI) inflation to continue declining and be around 3.25% by the end of 2024, eventually returning to the target range of 2-3% in late 2025.
This policy meeting marks Governor Philip Lowe’s second-to-last meeting before the end of his seven-year term. Michele Bullock is set to succeed him on September 17.
Note: This is breaking news. Please check back for further updates.
