MNI BRIEF: RBA Holds, Drops Future Cash Rate Hike Language

The Reserve Bank of Australia board left the cash rate unchanged today at 4.35%, maintaining February's ambiguous stance, but dropping language that a future rate cut could not be ruled out.

In a statement released after the decision, the board noted it would not rule “anything in or out,” a change from the previous note which stressed a further increase “in interest rates cannot be ruled out.”

The board’s decision was largely anticipated. (See MNI RBA WATCH: Board Set To Hold On Light Data) The cash rate has now held steady since November, when the board hiked it 25 basis points.

In its statement, the board noted services inflation remained elevated, but is moderating at a more gradual pace. "The data are consistent with continuing excess demand in the economy and strong domestic cost pressures, both for labour and non-labour inputs," the RBA noted.

“While there are encouraging signs that inflation is moderating, the economic outlook remains uncertain. The December quarter national accounts data confirmed growth has slowed. Household consumption growth remains particularly weak amid high inflation and the rise in interest rates. After recent declines, real incomes have stabilised and are expected to grow from here, which is expected to support growth in consumption later in the year."