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Reserve Bank of Australia holds cash rate steady amid persistent inflation

Published 18/06/2024, 02:43 pm
© Reuters.

Investing.com - The Reserve Bank of Australia (RBA) has opted to keep the cash rate target unchanged at 4.35% on Tuesday as policymakers grapple with inflation rates that remain persistently above target.

According to the release, the rate of decline in recent inflation data has slowed, with monthly Consumer Price Index (CPI) data rising by 3.6% in headline terms over the year to April and remaining significantly above the 2-3% target range.

Policymakers also noted continued excess demand in the economy, along with elevated domestic cost pressures for both labour and non-labour inputs.

Despite an easing in labour market conditions, they remain tighter than is consistent with sustained full employment and target inflation.

The central bank acknowledged the uncertain economic outlook, with recent data suggesting that returning inflation to target will likely be a bumpy process.

The forecasts published in May projected inflation to return to the 2-3% target range in the second half of 2025 and reach the midpoint in 2026. However, weak economic activity momentum, including slow GDP growth, a rise in unemployment, and slower-than-expected wages growth, have surfaced since then.

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