Australia’s c. bank signals extended pause on rate cuts

Australia’s central bank, the Reserve Bank of Australia (RBA), has indicated that interest rates are likely to remain on hold for an extended period as it battles to tame persistent inflation.

Minutes from the bank’s August policy meeting, released on Tuesday, revealed a closely contested decision between maintaining the cash rate at its current level of 4.35 per cent and increasing it further.

While underlying inflation remained stubbornly high at 3.9 per cent, the RBA ultimately decided to hold steady due to uncertainties in the economic outlook.

The central bank expressed concerns about market expectations for rate cuts, particularly the pricing in of a potential reduction by December.

The RBA emphasised that such expectations are inconsistent with its goal of returning inflation to the 2-3 per cent target range by 2026.

Attribution: Reuters

Subediting: M. S. Salama