The Reserve Bank of Australia (RBA) keeps interest rates on hold. Image credit: Newtown grafitti, Flickr.
The Reserve Bank of Australia (RBA) decided to keep interest rates on hold at 4.35 per cent on Tuesday, after a two-day meeting with board members.
The board mentions in a press release that while “recent data indicate that inflation is easing, it remains high”.
“The central forecasts are for inflation to return to the target range of 2–3 per cent in 2025, and to the midpoint in 2026.”
Many people expressed outrage, as they were expecting the RBA to cut interest rates this year to help with relief of the inflation crisis.
Greens Economic Justice spokesperson Senator Nick McKim said, “In a time when economic inequality is deepening and ordinary Australians are struggling under the weight of financial stress, the Reserve Bank’s failure to cut interest rates is an active decision to make that stress worse.”
In a recent press conference, RBA Governor Michele Bullock said that the “job’s not done” and aims to wait for inflation to drop to target.
The board further elaborates it cannot rule out a “further increase in interest rates”.
Despite what the board has said, economists expect the RBA to start cutting rates mid-year.
“At 4.1 per cent, the December inflation figure is still too high for the board to consider a rate cut today, however, all indicators point to inflation falling faster than last year’s forecasts, and this may well result in a decrease to the cash rate,” said chief economist at CreditorWatch, Anneke Thompson.
Last year, as inflation rates rose, the RBA were extremely quick to raise the cash rate in November 2023.
Chief economist at NAB, Alan Oster “ruled out the possibility that today’s decision would be another false dawn for struggling households”.
Senator Nick McKim disagrees with Oster’s perspective.
“Constant rate rises in 2022 and 2023 were a policy failure, they are deciding to double down on that failure by not cutting rates now,” said Senator McKim.
The RBA board said they “will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market”.
