RBA kept its cash rate target unchanged at 4.35%, aligning with market expectations. The central bank’s latest statement indicates continued openness to further rate hikes, but emphasizes that any such decision “will depend upon the data and the evolving assessment of risks.” This stance reflects a careful approach, as RBA awaits more comprehensive data, particularly the Q4 inflation figures due in January, before its next meeting in early February.
In its review of the “limited information” available since November meeting, RBA acknowledged that the data were “broadly in line with expectations.” The October monthly CPI update suggested continued moderation in inflation, but did not provide substantial insights into services inflation. While wage growth accelerated in Q3, it is “not expected to increase much further”. The labor market conditions are seen as “continuing to ease gradually,” though they remain tight.
RBA also highlighted “still significant uncertainties” regarding the economic outlook. It pointed out the potential for persistent services inflation in Australia. Domestically, the uncertainties include the lag effects of monetary policy and household consumption patterns. On a global scale, the ongoing uncertainty around Chinese economy’s trajectory and the broader implications of international conflicts were noted as significant factors influencing Australia’s economic environment.