RBA Holds Official Cash Rate Steady For Second Consecutive Month

On Tuesday, the Reserve Bank of Australia (RBA) decided to keep the official cash rate (OCR) on hold at 4.10 per cent for the second consecutive month.

Major banks, including Commonwealth Bank and National Australia Bank, revised their expectations for future rate increases after the RBA put a hold on the cash rate.

Stay up-to-date on the latest news with The National Briefing – keeping you in the loop with news as it hits:

It is the first time since March and April last year that the RBA has left the cash rate unchanged at two consecutive meetings.

In the statement explaining Tuesday’s decision, RBA Governor Phil Lowe said that the interest rates had been increased by four percentage points since May last year. 

“The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” Mr Lowe said.

“In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month,” he said.

Inflation in Australia is declining but remains high at six per cent.

He said the country’s economy was experiencing a period of below-trend growth, and this is “expected to continue for a while”.

Mr Lowe also reiterated the RBA’s forecast that Australia’s CPI inflation “will continue to decline, to be around 3.5 per cent by the end of 2024 and to be back within the 2–3 per cent target range in late 2025”.

However, there are notable uncertainties that warrant attention. Services price inflation has shown unexpected persistence in other countries, raising the possibility of a similar trend in Australia. 

Household consumption remains uncertain as many households face financial pressures, although some benefit from rising housing prices, substantial savings, and higher interest income. 

He said these factors have substantially slowed consumption growth due to the impact of cost-of-living pressures and higher interest rates.

Subscribe to The Briefing, Australia’s fastest-growing news podcast on Listnr today. The Briefing serves up the latest news headlines and a deep dive into a topic affecting you. All in under 20 minutes.