Interest rates have been kept on hold, with the Reserve Bank of Australia board standing pat for its fifth consecutive meeting.
The central bank on Tuesday left rates at 4.35 per cent — the highest level since late 2011 — citing the need to keep combating inflation but monitor the uncertain economic outlook.
The decision was widely expected. Economists at three of the four major banks do not expect rate cuts until November this year, but others say early next year is more likely.
Treasurer Jim Chalmers on Monday said measures in the Federal Budget were working to bring down inflation, which is now at 3.6 per cent. The RBA, through its rate hikes, is trying to get the inflation rate back to its target of between 2 and 3 per cent.
Governor Michele Bullock will speak at a press conference later on Tuesday to elaborate further on the board’s thinking.
In a statement, the RBA board said inflation was proving persistent, and though it was slowing, the pace of decline was slowing. The outlook remained uncertain.
“Broader data indicate continuing excess demand in the economy,” it said.
“Recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.”
The board added there was a risk that household consumption, or spending, would take longer to pick up once real disposable incomes grew as expected later this year.
More to come…