Reserve Bank holds interest rates steady again

The board this afternoon left the money charge unchanged at 4.10 per cent for a second month, following a yr of relentless charge hikes to drive down inflation.

After ABS knowledge was launched final week displaying an easing in nationwide inflation, the RBA says the present charge of 6 per cent is “nonetheless too excessive”.

This has pushed the RBA board’s determination at this time, alongside “uncertainty surrounding the financial outlook”.

“This may present additional time to evaluate the affect of the rise in rates of interest to this point and the financial outlook,” Lowe mentioned.

“Inflation in Australia is declining however continues to be too excessive at 6 per cent. Items worth inflation has eased, however the costs of many companies are rising briskly. Hire inflation can be elevated.

“The Australian financial system is experiencing a interval of below-trend development and that is anticipated to proceed for some time. Family consumption development is weak, as is dwelling funding.”

Lowe mentioned labour market situations remained tight however had “eased a bit of”, and that “corporations report that labour shortages have lessened”.

“With the financial system and employment forecast to develop under development, the unemployment charge is anticipated to rise regularly from its present charge of three.5 per cent to round 4.5 per cent late subsequent yr,” he mentioned.

“Wages development has picked up in response to the tight labour market and excessive inflation.

“On the combination stage, wages development continues to be in line with the inflation goal, offered that productiveness development picks up.”

Lowe mentioned that knowledge instructed inflation would ultimately return to the 2-3 per cent goal vary, however famous there have been “important uncertainties”.

“The outlook for family consumption can be an ongoing supply of uncertainty,” he mentioned.

“Many households are experiencing a painful squeeze on their funds, whereas some are benefiting from rising housing costs, substantial financial savings buffers and better curiosity revenue.

“In combination, consumption development has slowed considerably as a result of mixture of cost-of-living pressures and better rates of interest.”

Treasurer Jim Chalmers mentioned this morning that the financial system would sluggish “significantly” after rate of interest rises.

“It’s actually true Australians are below the pump. We perceive that. A part of the rationale for that’s they’ve had these rate of interest will increase which started earlier than the election final yr and continued after,” he mentioned.

“We nonetheless count on our financial system to proceed to develop, however…we predict the financial system will sluggish significantly as a consequence of the speed rises that are within the system, but additionally the worldwide financial uncertainty.”

It additionally follows the discharge of ANZ-Roy Morgan shopper confidence knowledge, which demonstrated an increase of three.2 factors this week to 78.4.

The index has now spent a document 22 straight weeks under the mark of 80, equalling the all-time document of 5 months from September 1990 to January 1991.

The information additionally revealed that only a fifth of Australians believed their households to be ‘higher off’ financially than this time final yr, whereas 53 per cent mentioned their households have been ‘worse off’.

Supported by the Authorities of South Australia