Reserve Bank of Australia Keeps Interest Rates Unchanged

Investing.com — The Reserve Bank of Australia (RBA) decided to maintain interest rates unchanged at 4.35%, as anticipated. This meeting marks the final one for 2024, with the next scheduled for February 2025.

In a statement, the RBA emphasized that achieving its inflation target of 2% to 3% is its "highest priority" and expressed growing confidence that inflation is trending toward this target range.

The RBA noted, "Some of the upside risks to inflation appear to have eased, and while aggregate demand remains above the economy's supply capacity, that gap is narrowing."

However, the central bank cautioned that inflation may not sustainably reach its target until 2026, which could delay any policy easing. The economic outlook remains uncertain, with minimal guidance on when rate cuts might begin. Recent GDP data showed a weaker-than-expected performance in the September quarter, leading to increased speculation that the RBA may start cutting rates by Q2 2024.

Despite anticipated growth in household consumption due to rising income, the RBA warned of potential risks that the recovery may be slower than expected.

Comments from the RBA seemed less hawkish compared to previous meetings, as the bank modified some of its language.

As a result of the RBA's statements, the Australian dollar weakened sharply, with the AUD/USD pair falling 0.7%, near an eight-month low. Meanwhile, Australian stocks saw a slight recovery, with the ASX 200 down 0.3%.