The Reserve Bank has held interest rates, despite acknowledging stubbornly high inflation, in its third decision of the year.
Tuesday’s decision means the cash rate will remain at 4.35 per cent, as it has been since the most recent hike last November.
WATCH THE VIDEO ABOVE: RBA announces interest rate hold.
Economists largely anticipated the decision, with 36 out of 37 surveyed by Reuters predicting a hold. Each of the big four banks had also forecasted a hold.
Making the announcement, RBA Governor Michele Bullock said in a statement that inflation was “declining more slowly than expected”.
“Returning inflation to target within a reasonable timeframe remains the board’s highest priority,” she said.
“The board expects that it will be some time yet before inflation is sustainably in the target range, and will remain vigilant to upside risks.”
The RBA sets an inflation target of between 2 per cent and 3 per cent. Annual inflation in March was recorded at 3.6 per cent.
“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain, and the board is not ruling anything in or out,” Bullock added.
“The board will rely upon the data and the evolving assessment of risks.
“In doing so, it will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.”
Treasurer Jim Chalmers said the board’s string of rate holds has “provided stability in difficult times for Australian mortgage holders and small businesses”.
“We understand many Australians are doing it tough and that’s why next week’s budget will focus on easing cost-of-living pressures, not adding to them,” he said.
“Our responsible approach to the budget is an important way we are taking pressure off inflation in the economy.
“Inflation is moderating and has almost halved since the Albanese Government came to office, and is less than half its annual peak in late 2022.”
Chalmers added that easing inflation and helping relieve cost-of-living pressures remains the top priority.
Meanwhile, former Sunrise host and Compare the Market’s economic director David Koch said even a small rate cut would have eased pressure on household budgets, but inflation could lead to bigger problems if allowed to run rampant.
“Australian consumers are doing the right thing in the battle against inflation,” Koch said.
“They have been asked to tighten their belts, and they are doing exactly that.
“But despite their efforts, inflation is proving stickier than expected, and that means homeowners really can’t bank on interest rates coming down any time soon”.