The Reserve Bank of Australia has held interest rates steady, keeping the official cash rate on hold at 4.35%. However economists fear another rate hike is on the horizon with inflation remaining stubbornly high.

New South Wales

The Reserve Bank of Australia (RBA) has decided to keep interest rates unchanged during its latest meeting. This decision follows a period of intense economic analysis, including federal and state budgets, GDP data, inflation figures, and unemployment rates. Although the possibility of a rate increase was discussed, the board opted to maintain the current strategy, marking the fifth consecutive decision to hold rates steady.

Inflation currently sits at 3.6%, a decrease from a peak of 7.8% a year and a half ago, but it remains above the RBA's target range of below 3%. The government forecasts that inflation will reach the target range by the end of next year, with a more optimistic projection placing it there by Christmas. This period sees both increased government and public scrutiny as the nation awaits the next possible movement in rates.

There is also ongoing discourse about the impact of these financial decisions on the upcoming election, with potential further rate hikes on the horizon. Mortgage stress appears to be a growing concern, and the RBA's stance on interest rates will be a focal point in economic discussions moving forward. The central bank continues to play a critical role in steering economic policy while managing inflation pressures.



Reserve Bank keeps interest rates on hold

Much has happened since the Reserve Bank met six weeks ago. There's been spending in a federal budget and four state budgets to mull over, and new data, GDP, inflation, and unemployment rates to digest. But the board's decision to keep rates on hold came as no surprise. The board did discuss the case for increasing interest rates at this meeting. In the end, it decided that its current strategy of staying the course was the right way to go. A rate cut wasn't considered. This is the fifth RBA decision in a row where rates have been left steady. And it's now more than two years since rate hikes started. And I suspect that we're going to see rising levels of mortgage stress on the back of this. And another rise can't be ruled out. I wouldn't say that the case for a rate rise is increasing. What I would say is that there's been a few things that have made the board alert. Is that central banks are known for something called jawboning. Because when people hear a central bank, like the Reserve Bank, sounding tough, that they might raise interest rates again, that causes people to wind in their spending. But there is consensus, if there is any movement soon, it's up. That we may see another rate hike, possibly two. And the thing that really, I think, is coming into this economy is the tax cuts. Inflation is concerningly coming down more slowly, currently sitting at 3.6%. That's down from the peak of 7.8 a year and a half ago. But it's still not dipped below 3% into the Reserve Bank's target range. This government continues to fail to deal with the interest rate and inflation pressures. The RBA forecasts inflation in its target by the end of next year, while the government projects it there by Christmas. There are potentially six more RBA decisions on interest rates before the election, bringing inevitable and renewed focus on the government's fight to bring down inflation. Both parties will either be pointing fingers or claiming credit, whether they deserve it or not. The Reserve Bank would probably prefer if they stayed out of it, and if anything, government spending was a bit less. Ashley Raper for 10 News First.

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