The Reserve Bank of Australia has left the official cash rate unchanged at 4.35% on Tuesday, a widely expected decision that offers little relief to mortgage holders already strained by three consecutive rate hikes earlier this year.
RBA Governor Michele Bullock warned that another rate rise remains on the table, citing persistently high inflation. She noted that the board did not consider hiking rates at this meeting, and the decision to hold was unanimous.
Bullock said the RBA is not alarmed by the unemployment rate rising to 4.5%, describing the jobs market as still 'a bit tight.' She added that the central bank does not expect the economy to shrink, stating, 'We don’t want to put it into recession, we want to slow it enough that we can bring the inflation rate back down.'
Stephen Smith, partner at Deloitte Access Economics, said the RBA had 'little choice but to wait' to see how much further the economy slows and how soon oil supply returns to normal. Rates markets continued to bet on about a 55% chance of another hike by December, while Westpac predicted a rate hike in August.
However, currency and stock traders started to bet that hikes had become less likely, with the Australian dollar falling slightly and the sharemarket rising. Commonwealth Bank and ANZ maintained their predictions that interest rates have peaked and will be cut in 2027.
Treasurer Jim Chalmers welcomed the decision, saying, 'It doesn’t make life any easier for people but it doesn’t make life harder either.'
