MNI BRIEF: RBA Holds, Notes Declining Inflation Risk

MNI (SYDNEY) - The Reserve Bank of Australia Board decided to hold the 4.35% cash rate Tuesday, but noted growing confidence that inflationary pressures are declining.

“Some of the upside risks to inflation appear to have eased and while the level of aggregate demand still appears to be above the economy’s supply capacity, that gap continues to close,” the Board noted in a statement. 

The Board’s decision, its last for 2024, was largely anticipated. (See MNI RBA WATCH: Board To Hold, Await Clearer Q4 Data) It will meet again Feb 17-18. 

The RBA believes underling inflation, currently at 3.5%, remains too high above the 2.5% midpoint target. The Reserve has forecasted its return to target by Q4 2026.

“The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”