Reserve Bank Keeps Rates On Hold For September 2024
Once again the RBA have left the rates on hold in todays Reserve Bank meeting. The cash rate remains unchanged at 4.25%. The Board are happy that inflation has come down since the high point back in 2022 however they feel inflation still needs to be reduced before we will see a reduction in rates.The Reserve Bank feels inflation needs to be sitting around the middle point of 2% to 3%.
Headline inflation is ant
icipated to decrease further in the short term due to federal and state cost of living relief measures. However, the board current projections indicate that inflation will not sustainably return to target levels until 2026. Underlying inflation has exceeded the midpoint of the target range for 11 consecutive quarters and has shown minimal decline over the past year.
Inflation Outlook Remains Highly Uncertain
In August, central forecasts indicated that underlying inflation would return to the target range of 2-3 percent by late 2025 and reach the midpoint in 2026. This was based on an assessment that the economy’s ability to meet demand was weaker than previously thought, as evidenced by persistent inflation and a strong labor market.
Recent GDP data for the June quarter confirmed weak growth. Earlier declines in real disposable incomes and restrictive financial conditions continue to weigh on consumption, especially discretionary spending. However, overall consumer demand, including spending by temporary residents such as students and tourists, remained more resilient.
While wage pressures have eased somewhat, labor productivity remains at 2016 levels, despite improvements over the past year.
Broader indicators suggest that labor market conditions remain tight, despite gradual easing. From June to August, employment grew by an average of 0.3 percent per month. The unemployment rate held steady at 4.2 percent in August, up from a low of 3.5 percent in mid-2023. However, the participation rate remains at record highs, vacancies are elevated, and average hours worked have stabilized.
Overall, the latest data do not alter the Board’s assessment from the August meeting that policy is currently restrictive and working as expected. However, uncertainties remain. The central projection is for household consumption growth to pick up in the second half of the year as income growth headwinds diminish. There is a risk that this recovery may be slower than anticipated, leading to continued subdued output growth and a sharper deterioration in the labor market. Additionally, there are uncertainties about the lagged effects of monetary policy and how firms’ pricing decisions and wages will respond to slower economic growth amid tight labor market conditions.
Internationally, there is also significant uncertainty. Some central banks have eased policy but remain cautious about risks from weaker labor markets and stronger inflation. The outlook for the Chinese economy has softened, affecting commodity prices, and geopolitical uncertainties remain pronounced.”
Returning Inflation To Target Is The Priority.
The board remains committed to returning Australia Inflation to the target and within a reasonable time frame. This has always been the boards mandate along with full employment.
Even though inflation has decreased, the board still feels inflation is still too high and has the potential to swing back up, they are taking a vigilant approach.
The board will pay a close attention to global economies and financial markets to make sure inflation comes back to the target range.
Reserve Bank Of Australia keep Rates on Hold In April 2024
The Reserve Bank of Australia (RBA) had its March monetary policy meeting today, and as expected, the cash rate will be maintained at 4.35%. This decision was widely anticipated, especially considering the recent data from the Australian Bureau of Statistics, which indicated a decrease in annual trimmed mean inflation to 3.8% in January, down from 4.0% in December. Annual Trimming is another way to trim the items with the largest price changes to give a weighted average. The Australian Bureau of Statistics explains Annual Trimming, Inflation, and its measurements.
Although the introduction of interest rate increases since May 2022 seems to positively impact the economy, RBA governor Michele Bullock reaffirmed the RBA’s commitment to bringing the cash rate back within its target range of 2-3%.
Given the prevailing market uncertainty, seeking advice from an expert can be beneficial. Feel free to reach out if you’d like to explore your options further.
Reserve Bank Decided to Keep The Cash Rate at 4.35% again.
Reserve Bank Decided to Keep The Cash Rate at 4.35%.
In its first meeting of 2024 today, the Reserve Bank of Australia (RBA) has chosen to hold the cash rate steady at 4.35%.
This decision aligns with expectations, as inflation has decreased to 4.1% for the December Quarter, falling short of the RBA’s earlier forecast of 4.5% in November.
The observed inflation rate is notably lower than the RBA’s November projection, indicating that the 13 rate hikes since May 2022 have had a more significant impact on the economy than initially anticipated.
As a result, many market analysts now anticipate a downward adjustment in the RBA’s cash rate in the near future. However, it’s important to recognize that uncertainties persist, and inflationary pressures remain within the economy.
Considering the decision to maintain the interest rate, seeking advice from a financial expert regarding your specific circumstances and potential options could be advantageous. Please don’t hesitate to contact me if you’d like to explore your situation further.
Kind Regards
Desmond Morgan
Reserve Bank Announcement Decemeber 2023
Final Monetary Policy for 2023
In its final monetary policy decision for the year, the Reserve Bank of Australia (RBA) maintained the cash rate at December’s board meeting.
This choice aligns with recent data from the Australian Bureau of Statistics, indicating a notable decrease in annual inflation from 5.6% to 4.9% in October, primarily attributed to higher interest rates cooling the economy.
Interest Rates On Hold But With Caution
Despite the significant drop from the December 2022 peak of 8.4%, RBA governor Michele Bullock has cautioned that domestic inflation is proving more persistent than initially anticipated, suggesting that challenges may still lie ahead.
Given the current uncertainty in the interest rate landscape, seeking advice from an expert can provide valuable insights. Feel free to reach out if you’d like to discuss your situation and explore potential options.
Explore Home Loan Assistance
In its final monetary policy decision for the year, the Reserve Bank of Australia (RBA) maintained the cash rate at December board meeting.
This choice aligns with recent data from the Australian Bureau of Statistics, indicating a notable decrease in annual inflation from 5.6% to 4.9% in October, primarily attributed to higher interest rates cooling the economy.
Despite the significant drop from the December 2022 peak of 8.4%, RBA governor Michele Bullock has cautioned that domestic inflation is proving more persistent than initially anticipated, suggesting that challenges may still lie ahead.
However, with the RBA deciding to leave the interest rate unchanged at this meeting due to inflation showing signs of slowing down, begs the question, what will they do with rates at the next meeting in February 2024.
It is important to Seek Advice from an Expert Mortgage Broker
Given the current uncertainty in the interest rate landscape, seeking advice from an expert can provide valuable insights. Feel free to reach out if you’d like to discuss your situation and explore potential options.
