RBA leaves interest rates unchanged, will maintain restrictive policy
2024.11.04 23:22
Investing.com– The Reserve Bank of Australia kept interest rates unchanged on Tuesday, while signaling that it will continue to keep monetary policy restrictive due to concerns over inflation remaining too high.
The RBA left its after last increasing the rate a year ago. The decision was widely anticipated by markets.
The RBA said that returning inflation back to its 2% to 3% target remained its “highest priority,” and that the bank was not “ruling anything in or out.”
“Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range,” the RBA said in a statement, adding that underlying inflation still remained “too high.”
“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”
Recent data showed Australian fell within the RBA’s annual target range in the third quarter. But remained sticky and well above the RBA’s target range, with the central bank reiterating on Tuesday that it only expected inflation to sustainably reach its target by 2026.
Australian economic growth cooled substantially in recent quarters, amid pressure from high interest rates. But this still did not result in a meaningful decline in inflation, with a strong job market, high housing costs and sticky services inflation all factoring into higher price pressures.
The RBA made no mention of any plans to begin easing monetary policy, putting it in contrast to other major central banks, most notably the Federal Reserve, who all began cutting interest rates earlier this year. The Fed is expected to cut rates further this week.
The Australian dollar firmed slightly after the RBA’s decision, given that interest rates are likely to remain high for longer. The pair rose 0.1%.
Australian stocks maintained their losses, with the index trading down 0.4%.
