Reserve Bank keeps rates on hold for third month in row

Interest rates have been left untouched at 4.1 per cent in September in welcome news for borrowers.

The Reserve Bank of Australia has stayed on the sidelines for the third month in a row, a move expected by most economists at outgoing governor Philip Lowe’s final meeting.

RBA governor Philip Lowe kept his reference to more tightening if needed.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks,” he said.

“In making its decisions, the board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.”

The back-to-back months on hold follow four percentage points of increases since May last year that have been piling pressure on borrowers.

Monthly repayments have gone up by $1217 on a $500,000 home loan during the RBA’s latest tightening cycle, according to numbers crunched by comparison site Canstar.

The central bank has been lifting interest rates to bring down inflation, which has softened considerably from its peak but remains well above its two-three per cent target range.

The monthly consumer price index declined convincingly to 4.9 per cent in July from 5.4 per cent in June.

In December, the gauge recorded an 8.4 per cent annual increase in prices.

The board also ingested softer jobs market data and a subdued quarter for wage growth, diminishing the likelihood of a wage-price spiral.

The meeting was the last under the leadership of Dr Lowe, with deputy governor, Michele Bullock, taking on the top job later this month.