By Poppy Johnston, AAP
The Reserve Bank has left interest rates on hold at 4.35 per cent for the third meeting in a row in an almost universally expected move reflecting inflation that is cooling but still too high.
The board came to its decision on Tuesday after two days reviewing the the state of the economy and progress on inflation.
Borrowers may have been spared another interest rate hike at the March meeting but more increases to the cash rate have not been expressly ruled out.
“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the board is not ruling anything in or out,” the post-meeting statement read.
“The board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.”
“The board remains resolute in its determination to return inflation to target.
Thirteen interest rate hikes since May 2022 have hammered demand and brought economic growth to a crawl, weakening the inflationary pulse in the process.
And while inflation remains above the two to three per cent target range, it has been moderating more quickly than expected, cooling to 4.1 per cent in the December quarter.
Given the convincing progress on inflation, economists broadly agree the next move will be down but a question mark hangs over the timing of those cuts.
The big four banks are leaning towards cuts in the second half of 2024, with Commonwealth Bank and Westpac pencilling in a September start while NAB and ANZ forecast easing to begin in November.
RBA governor Michele Bullock will provide further context for the March decision in a press conference later on Tuesday.
