RBA Holds Interest Rates, Signals More Hikes to Come
Board Remains Hawkish Despite Cooling Inflation
Australians Facing Further Pressure as Borrowings Costs Rise
The Reserve Bank of Australia (RBA) has kept the cash rate on hold, continuing a record-breaking run of monetary tightening. The widely expected decision at the end of the board's December meeting leaves the benchmark rate at 4.35%. However, the central bank signaled that the fight against inflation is far from over, with further interest rate hikes on the horizon.
The RBA's hawkish stance comes despite signs that inflation is cooling. The most recent consumer price index (CPI) figures showed that annual inflation eased slightly to 6.8%. However, the board remains concerned about persistent inflationary pressures, particularly in the labor market. Unemployment remains at a multi-decade low, and businesses are facing increasing costs for labor and other inputs.
The RBA's rate hike is likely to put further pressure on Australian households and businesses. Mortgage rates are now at their highest level in more than a decade, and consumer confidence is falling. The central bank has acknowledged these concerns but argues that bringing inflation under control is necessary to ensure a sustainable economic recovery.
Economists are now expecting the RBA to continue raising interest rates in 2023. The central bank has indicated that it will assess the economic data closely and adjust its policies accordingly. The next meeting of the RBA board is scheduled for February.
Comments