RBA leaves rates on hold

The Reserve Bank board has left interest rates on hold at 4.10%.

The RBA’s decision is the last under new Reserve Bank Governor, Philip Lowe, before he hands the reins to Michele Bullock effective from 18 September.

The decision to leave rates on hold comes of the back of two rounds of data showing that inflation has begun to moderate.

The RBA announcement said inflation in Australia has passed its peak and the monthly CPI indicator for July showed a further decline.

“But inflation is still too high and will remain so for some time yet. While goods price inflation has eased, the prices of many services are rising briskly. Rent inflation is also elevated. The central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025.”

“Returning inflation to target within a reasonable timeframe remains the Board’s priority. High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.”