MNI BRIEF: RBA Pauses For Second Month At 4.10%

The Reserve Bank of Australia board left the cash rate unchanged at 4.10% for the second consecutive month, but retained a tightening bias, noting the pause would allow more time to assess the impact of higher rates.

In a statement, Governor Philip Lowes said inflation remained high, particularly services prices and rent. “The recent data are consistent with inflation returning to the 2–3% target range over the forecast horizon and with output and employment continuing to grow,” Lowe noted. “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks.”

He said the board would continue to pay close attention to developments in the global economy, trends in household spending and the outlook for inflation, and the labour market.

MNI reported last week, while the RBA would consider a 25bp hike, the case for a pause had grown strong as the full impact of interest-rate hikes to date had yet to be felt and consumer sentiment weakened. (See MNI RBA WATCH: Sticky Services Put Rate Hike In Consideration)