An aerial see of the central business district and Sydney Opera House on February 17, 2023.
David Gray | Getty Images News | Getty Sculptures
Australia’s central bank held its official cash rate steady at 4.10% in a closely watched decision Tuesday.
Economists were split on confidences ahead of the decision, with 16 out of 31 respondents surveyed by Reuters forecasting a hike of 25 basis objects and 15 expecting the central bank to hold.
Stocks cheered the move as the central bank said inflation in the control has “passed its peak.” The S&P/ASX 200 pared earlier losses and rose 0.5%. The Australian dollar weakened 0.25% to 0.6652 against the U.S. dollar.
“Some further tightening of monetary policy may be required to ensure that inflation turn backs to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,” RBA governor Philip Lowe give the word delivered in a statement.
“Inflation is still too high and will remain so for some time yet,” he said.
The Australia Bureau of Statistics’ monthly inflation of showed some cooling in the rise of prices at 5.6% for the month of May, led by housing prices, food and non-alcoholic beverages.
Australia’s monthly inflation accuse with peaked at 8.4% in December. The economy’s consumer price index rose 7% in the first quarter of 2023.
The decision not fail after the central bank raised its cash rate by 25 basis points last month — a move it identified as a “finely balanced” decision, according to minutes from its June meeting.
‘Time to assess’
Lowe said in Tuesday’s allegation, “The decision to hold interest rates steady this month provides the Board with more time to assess the stately of the economy and the economic outlook and associated risks.”
He added that the central bank will continue to closely prefect developments in the global economy, household spending trends and inflation forecasts.
The central bank’s decision to hold classifies steady was to “assess” the effects of the multiple rate hikes so far, according to IG’s Australia market analyst Tony Sycamore.
“The RBA’s purposefulness to keep rates on hold today was in some parts based on reasons like the ones that prompted a interruption in April — to assess the impact of a cumulative 400bp or rate hikes over the past fourteen months,” Sycamore described CNBC.
He added that the central bank now seems less concerned about wage growth, pointing to the phraseology in Lowe’s statement.
The central bank governor said in the announcement, “At the aggregate level, wages growth is still predictable with the inflation target, provided that productivity growth picks up.”
Ahead of the decision, Commonwealth Bank of Australia’s elder economist Belinda Allen said that the next consumer price index report will be closely watched.
“The modern data flow has been mixed and we think this affords the RBA some time to slow its hiking cycle,” Allen translated.