At the September board meeting the Reserve Bank of Australia (RBA) has opted to maintain the official cash rate at its current rate of 3.60 per cent, as widely expected by market.
Following discussions on 29 and 30 September, the Monetary Policy Board announced its rate decision this afternoon (30 September), holding the official cash rate where it is.
Most bank economists had expected the RBA to reduce the cash rate today, with all four of Australia’s major banks predicting that the central bank would maintain its current settings, after having dropped the cash rate to its lowest level in two years just six weeks ago.
Similarly, on Monday (29 September), the ASX 30 Day Interbank Cash Rate Futures was trading at 96.41, indicating that just 4 per cent expected the interest rate to decrease to 3.35 per cent.
In its post-meeting statement, the RBA monetary policy board said: “With signs that private demand is recovering, indications that inflation may be persistent in some areas and labour market conditions overall remaining stable, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting. Financial conditions have eased since the beginning of the year and this seems to be having some impact, but it will take some time to see the full effects of earlier cash rate reductions.”
“The board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve.”
It continued: “The board remains alert to the heightened level of uncertainty about the outlook. It noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia.”
“The board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.”
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.