No change in interest rates as price pressures ebb

February 6, 2024 BY

The RBA has left interest rates unchanged after the board met for its first policy meeting for 2024. (Flavio Brancaleone/AAP PHOTOS)

The Reserve Bank of Australia has kept interest rates on ice in a widely expected move that will be welcomed by financially strained borrowers.

Board members decided to leave interest rates steady at 4.35 per cent on Tuesday, after the bank’s first two-day meeting of 2024.

Economists broadly expected no change in the official cash rate following a promising run of data, including a weaker-than-expected inflation print, muted spending numbers and signs of a softening jobs market.

With the 4.25 percentage points of monetary policy tightening since May 2022 clearly at work to cool the economy and bring down inflation, talk has turned to the timing of rate cuts.

Yet the board, led by governor Michele Bullock, said there was still a chance more interest rate hikes could be needed, though her account of the economy was broadly more optimistic than her last communications back in December.

“The board expects that it will be some time yet before inflation is sustainably in the target range,” it said in a statement.

“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out.”

Further insights into the February decision will be fleshed out in a press conference with Ms Bullock later in the day – a new edition to the post-meeting lineup designed to inject more transparency into the bank’s operations.

By Poppy Johnston AAP.