The Reserve Bank has just announced its decision to keep the cash rate unchanged at 4.1%
RBA leaves interest rates on hold at 4.1 per cent September 2023The Reserve Bank of Australia (RBA) has chosen to maintain the official cash rate at 4.1 percent, marking the third consecutive month without any changes since the rates began to rise in May 2022.
Reserve Bank of Australia cash rate decision September 2023Philip Lowe, the Governor of the RBA, shared his thoughts following this decision, stating, "Recent data align with our expectations of inflation returning to the 2–3 percent target range in the foreseeable future, while economic output and employment continue to grow. Although there has been a slowdown in growth, inflation is on a declining trend, the labor market remains robust, and the economy continues to operate at a high level of capacity utilization." Lowe also emphasized the existence of significant uncertainties in the economic outlook, including factors such as inflation in service prices, the time lag in the impact of monetary policy, and how businesses set prices and adjust wages in response to a slower-growing economy in a tight labor market. He concluded, "There may be a need for further tightening of monetary policy to ensure that inflation returns to the target range within a reasonable timeframe. However, this decision will depend on future data and the evolving assessment of risks." Lowe also mentioned that the Board would closely monitor global economic developments, household spending trends, and the prospects for both inflation and the labor market. Economist Eleanor Creagh, a senior economist at PropTrack, noted that the decrease in inflation momentum and consumer spending has lessened the RBA's pressure to continue raising interest rates. She commented, "The Australian economy has faced significant inflation challenges, prompting the central bank to implement the most rapid interest rate increases in a generation. However, August marked the third consecutive month of faster-than-expected inflation moderation. Additionally, the full impact of the previous rate hikes has yet to be fully realized, and we can expect inflation to continue its downward trajectory. All of these factors have provided room for the RBA to pause in September."
Tuesday's board meeting was also the last chaired by RBA governor Philip Lowe, whose seven-year term ends next week.
Michele Bullock, the RBA's current deputy governor, will begin in the role on September 18.
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