A Sydney ferry passes the Opera House and skyline of the central business district area on May 12, 2020 in Sydney, Australia.
James D. Morgan | Getty Images
The Reserve Bank of Australia held interest rates at 4.1% for a second month on Tuesday, in another reprieve for mortgage holders as the central bank buys time to assess the impact of previous hikes.
This comes as inflation in Australia slowed to 6% in the second quarter from 7% in the first quarter, but was still well above the RBA’s stated target of 2% to 3%.
“The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” Governor Philip Lowe said in a statement.
“In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook,” he added.
The Australian central bank has hiked interest rates by a cumulative 400 basis points since May last year to its highest in 11 years. The country has been grappling with surging inflation as economic activity picked up after the height of the Covid-19 pandemic.
“Goods price inflation has eased, but the prices of many services are rising briskly. Rent inflation is also elevated,” Lowe added.
“The central forecast is for CPI inflation to continue to decline, to be around 3.25% by the end of 2024 and to be back within the 2–3& target range in late 2025.”
Tuesday’s RBA policy meeting is Philip Lowe’s penultimate meeting as governor. Michele Bullock is set to succeed him when he finishes a seven-year term in office on Sept. 17.
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