The Reserve Bank of Australia (RBA), which surprised the markets that did not expect an interest rate hike in its last two meetings, did not change the interest rate this time despite the analysts’ rate hike forecasts.
According to the statement made by the Reserve Bank of Australia (RBA), the benchmark interest rate was left at 4.10 percent. Analysts had expected a 25 basis point rate hike.
The decision to keep interest rates steady this month will give the Monetary Policy Committee more time to assess the state of the economy, the economic outlook and related risks, the statement said.
The RBA suspended the interest rate hike at its April meeting, which it held 10 meetings in a row, and surprisingly increased it again in the May and June meetings.
The bank also left the interest rate paid on swap balances at 4.0 percent.
RBA stated that inflation in Australia has passed its peak and the monthly CPI indicator for May has decreased further. “However, inflation is still very high and will remain so for a while,” the statement said.
Inflation figures in the country are announced for quarterly periods. In the first quarter of 2023, which was last announced, inflation decreased from 7.8 percent to 7.0 percent. Indicators for May point out that inflation has dropped to 5.6 percent. However, this rate is still well above the RBA’s target of 2-3 percent.
“Monetary policy may need to be tightened a little more to ensure inflation returns to target within a reasonable timeframe, but that will depend on how the economy and inflation develop,” the RBA said.