RBA board finally presses pause on interest rate rises

AUSTRALIA’S central bank has left interest rates unchanged at 3.6 per cent in April as the economy shows signs of cooling off.

The decision will offer welcome relief for mortgage holders, who have endured 10 interest rate hikes in a row that have added hundreds of dollars to the costs of servicing a mortgage.

Reserve Bank Governor, Philip Lowe, said further tightening of monetary policy may still be needed.

“The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty,” he said.

“In assessing when and how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”

While the RBA has opted to keep interest rates on hold to allow it to observe the impacts of its handiwork so far, another hike was firmly on the cards as the board sat down for its most challenging rates decision since it started lifting rates last May.

Economists were divided on the non-conclusive data released ahead of the April board meeting, including signs of strong business conditions and ongoing tightness in the labour market.

But while these data sources pointed to resilience in the economy, weaker-than-expected inflation and flatlining retail spending suggested the slowdown was already underway.

-BY POPPY JOHNSTON/ AAP