Australia’s RBA keeps interest rates at 4.35%

The Reserve Bank of Australia (RBA) decided on Tuesday to leave rates at a 12-year high of 4.35 per cent during its first meeting of the year, leaving the door open to another rise if needed.

RBA’s board warned of another hike in the interest rate as inflation is still too high. The country’s inflation reached 4.1 per cent year-on-year in the fourth quarter of 2023, according to the statement.

“While prices continued to rise for most goods and services, annual CPI inflation has fallen from a peak of 7.8 per cent in December 2022, to 4.1 per cent in December 2023,” says Australian Bureau of Statistics head of prices statistics Michelle Marquardt.

The inflation slowed down slightly from the RBA’s initial forecast of 4.3 per cent. Goods price inflation had fallen faster than the bank had forecast, but services inflation was only moderating gradually.

The bank expected that inflation may return to the target range of 2–3 per cent in 2025 and to the midpoint in 2026, according to the statement.