Reserve Bank of Australia holds interest rates steady at 3.6%, warns of rebound in inflationary pressures

The Reserve Bank of Australia unanimously voted to maintain the policy interest rate at 3.6%, warning that price pressures are still easing. Economists predict the interest rate cut cycle could extend into mid-69.

November 4, 2568 at 10.50:XNUMX a.m. Bloomberg News reported that The Reserve Bank of Australia (RBA) unanimously voted to hold the policy interest rate at 3.6%, as expected by markets. Following higher-than-expected inflation data for the latest quarter and a continued tightening of the labor market, the Committee confirmed that future decisions would be based primarily on incoming economic data.

Rebuildables stated in a statement that “Latest inflation data suggests that price pressures remain in the economy.” ready to add that The recovery in private demand and the tight labor market led the Committee to maintain the interest rate at the current level.

After the interest rate hold announcement, the Australian dollar weakened against the US dollar but strengthened against the New Zealand dollar to its highest level since 2565 as investors bet the RBA will pursue a tighter monetary policy than other central banks.

Economists from Goldman Sachs and the Commonwealth Bank (CBA) Evaluate that The RBA's rate-cutting cycle has come to an end, with the next cut now expected in May 2569 amid renewed inflation concerns as the economy recovers and households gain liquidity.

The RBA's hold on interest rates comes after the US Federal Reserve (Fed) cut interest rates for the second time in a row, although further cuts are still likely in December, while the Bank of England (BoE) is also expected to hold rates steady.

Callam Pickering, economist at Indeed Inc. said “The RBA is in a difficult position. Core inflation remains above target, but the overall economy remains weak and the labor market is starting to slow.”

The RBA's latest quarterly economic forecasts project core inflation to remain above its 2–3% target until mid-2026 and the labour market to remain stable, assuming only one rate cut in the second quarter of next year.

Rebuildables Further specifying that “The higher-than-expected Q3 CPI figure indicates that there may still be more underlying inflationary pressure than previously estimated.” It also warned that the latest data reflects capacity pressure within the economy.

Domestic economic data remains mixed, with private demand recovering and home prices hitting new record highs in October. Meanwhile, industrial production contracted for the first time this year and employment fell for the first time in eight months, pushing the unemployment rate up to 4.5%, its highest since 2021.

On the international front, uncertainty remains high over the Trump administration's protectionist trade policies, geopolitical tensions and slowing Chinese demand, although a US-China trade ceasefire agreement last week has helped ease market concerns somewhat.

Rebuildables Finally, he said that “Uncertainty remains regarding the level of monetary policy tightening, the effects of past easing, the balance between supply and demand in the economy, and the future outlook for employment and productivity.” This could affect inflation and employment trends both ways.

refer : www.bloomberg.com

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