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RBA Leaves Cash Rate Unchanged At 4.1 per cent

By Tim Graham

Today, the Reserve Bank of Australia held the cash rate target at 4.1 per cent as market pricing suggested. 

This decision is a result of the interest rates that have increased by 4 percentage points since May last year and the uncertain economic outlook. 

While inflation is past its peak, it is still too high and the board is intending to return it to the 2 per cent to 3 per cent target range. The board is expecting the economy to grow as inflation returns to target, however this path is a narrow one. 

With housing prices rising, some households have substantial savings buffers, but other households are experiencing financial strain. Global economic outlooks over the next couple of years are also uncertain. 

In light of these variables, the board needed more time to assess the state of the economy and the economic outlook, so they chose to hold interest rates steady this month. Some further tightening of monetary policy may be required to ensure inflation returns to target, which the board is resolute in achieving. 

However, the decision depends upon the evolution of the economy and inflation. In making their decisions, the board will pay close attention to global economic trends, household spending and the forecasts for inflation and employment.


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