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Fibre2Fashion
5 days ago
- Business
- Fibre2Fashion
Reserve Bank of Australia keeps cash rate unchanged at 3.85%
The Reserve Bank of Australia (RBA) has decided to keep the cash rate target steady at 3.85 per cent during its latest board meeting, citing continued moderation in inflation and the need for more data to confirm a sustainable return to the 2.5 per cent target. Headline inflation has eased significantly from its 2022 peak, supported by earlier rate hikes that have helped rebalance demand and supply. In the March quarter, headline inflation fell within the RBA's 2–3 per cent target range, while trimmed mean inflation stood at 2.9 per cent. However, recent data from the monthly CPI Indicator came in marginally stronger than expected, prompting the Board to adopt a cautious wait-and-see approach. RBA held the cash rate at 3.85 per cent, citing moderating inflation and ongoing economic uncertainty. While inflation has eased, recent data showed slightly stronger-than-expected figures. The RBA is cautious amid global trade tensions and tight domestic labour markets, awaiting further data to confirm a sustainable path to its 2.5 per cent inflation target. '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 RBA's Monetary Policy Board stated in a statement. The outlook remains clouded by global economic uncertainty, particularly around trade tensions and policy responses—most notably the impact of pending US tariffs. Despite improved financial market sentiment, the RBA acknowledged potential headwinds from delayed business and consumer spending. Domestically, household incomes have risen, private demand is gradually recovering, and some financial stress indicators have eased. Yet, businesses in certain sectors continue to struggle with weak demand and limited pricing power. Labour market conditions remain tight, with low underutilisation rates and ongoing labour shortages. Although wage growth has cooled, productivity gains remain elusive, keeping unit labour costs elevated. The RBA reiterated its commitment to price stability and full employment, signalling close monitoring of inflation trends, labour market conditions, and global risks. The Board said it would remain data-dependent in future policy decisions and stands ready to adjust settings if economic conditions shift significantly. Fibre2Fashion News Desk (KD)
CNBC
5 days ago
- Business
- CNBC
Australia unexpectedly holds policy rate as it awaits more inflation data
Australia's central bank held its policy rate at 3.85%, saying it needed more time to assess inflation data. Economists polled by Reuters had been expecting a cut of 25 basis points to 3.6%. In its statement Tuesday, the Reserve Bank of Australia said it was waiting for "a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis." "While recent monthly CPI Indicator data suggest that June quarter inflation is likely to be broadly in line with the forecast, they were, at the margin, slightly stronger than expected," the central bank added. Australia's inflation came in below expectations at 2.1% in May, the lowest since October 2024. In the first quarter, inflation was at 2.4%, staying at a four-year low. Just after the data release, the S&P/ASX 200 index fell 0.24%, while the Australian dollar strengthened 0.79%. Australia is currently struggling with a growth slowdown as public spending shrinks and as consumer demand and exports weaken. The country recorded a 1.3% expansion in the first quarter of the year, missing Reuters poll expectations of 1.5%.
