The Reserve Bank of Australia (RBA) kept its cash rate unchanged at 4.35% during its final meeting of 2024, marking the ninth consecutive meeting without a change. This decision aligns with market expectations, reflecting the central bank’s cautious approach as it monitors the economy’s response to previous rate hikes.

Inflation Trends and Outlook

While headline inflation has eased significantly and is expected to remain lower for some time, the The Reserve Bank of Australia highlighted that underlying inflation remains elevated. The bank reiterated that inflation is unlikely to reach its target range of 2–3% until 2026, though it expressed growing confidence that the current trajectory is sustainable. This duality underscores the RBA’s balanced stance between controlling inflation and supporting economic growth.

Mixed Economic Signals

Recent economic data showed mixed results, consistent with the RBA’s forecasts. Household consumption remains a key area of concern, with any potential recovery expected to be slower than anticipated. This sluggishness, coupled with subdued output growth, could lead to a sharper deterioration in the labor market, adding complexity to the economic outlook.

Read More: Australia Business Confidence

Data-Driven Policy Amid Risks

The Reserve Bank of Australia emphasized its reliance on evolving data and risk assessments, including geopolitical uncertainties, to guide future decisions. Additionally, the committee maintained the interest rate on Exchange Settlement balances at 4.25%. As the global economic landscape continues to shift, the RBA’s cautious but steady approach signals its commitment to achieving sustainable economic stability in the long term.

Source