RBA Holds Interest โRates Steady at 3.6% in September
The Reserve Bank of Australia (RBA) has decided to maintain the โcashโ rate at 3.6% at its โSeptemberโ meeting, following a series of cuts earlier in the year. This pause comes after the RBA loweredโฃ rates three times previously in 2023, bringing themโฃ down from a high of 4.35% before the February board meeting.
The decision reflects a cautious approach as the Australian economy showsโ signs of recovery and inflation remainsโฃ a โconcern. Recent monthly inflation data โฃregisteredโข at 3%, exceeding economists’ expectations, especially in the services sector.
In a statement released after the meeting, the RBA Monetary Policy Boardโ noted, “with signs that private demand is recovering, โindications โฃthatโ inflation may be persistentโค in some areas and labor market conditionsโ overall remainingโข stable, the board decided that it was appropriate โฃto maintainโ theโข cash rate at โits โcurrent levelโ at this meeting.”
Theโ RBA also observed positive momentum in key economic areas. “Private consumption is picking upโ as โคreal household incomes rise and measures of financial conditions ease,” the board stated. Moreover, the housing market is strengthening, indicating the impact of previous rate reductions. โขCreditโค remains accessible โฃto both households and businesses.
Recent data from the australian Bureau of Statistics showsโข annual private sector credit growth โฃreached 7.2% โคin August – the fastest pace as theโฃ global financial crisis, excluding โthe period of exceptionally low rates during the pandemic.
JP Morgan economists Tom Ryan and Ben Jarmanโฃ predict this “robust credit growth should also support an ongoing recovery in housing, business investment and private consumption.”
The RBA acknowledged that while โfinancial conditions have eased as the beginning of the year, “it will take some time to โseeโฃ the โfull โeffects of earlier cash โrate reductions.” RBA chief โeconomist Sarah Hunter recently told a parliamentary committee thatโฃ Australia’s economy appeared to be in a “cyclical upswing.”
