RBA Pauses interest rate hikes as inflation remains high: Impacting Australia’s economy and Future

RBA Pauses Interest Rate Hikes: What It Means for Australia’s Inflation and Economy. Get the latest updates on the RBA’s decision to pause interest rate hikes as inflation remains high. Find out what this means for Australia’s economy and future rate cuts.

 

The Reserve Bank of Australia (RBA) appears to be nearing the end of its interest rate hikes, providing some relief to borrowers. However, the central bank isn’t planning to cut rates anytime soon, as inflation remains stubbornly high. This was a key message from the RBA’s September 2024 meeting, where Governor Michele Bullock confirmed that, for the first time in months, a rate rise wasn’t seriously considered.

Bullock emphasized that while inflation is gradually easing, progress has been slower than expected. The current monetary settings, she believes, are tight enough to curb inflation without causing economic disruption. She also noted that underlying inflation, which excludes extreme price changes, is still proving to be persistent.

Inflation figures for August are due soon, and while federal and state energy rebates are likely to soften the overall figures, the RBA is cautious. Services and manufacturing costs remain high, and productivity levels are still slow, with inflation not returning to the RBA’s target range until 2026.

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As global trends move towards lower interest rates, Australia’s economy could benefit from a stronger currency and cheaper imports. However, uncertainties remain, especially over government policies such as energy rebates, which have not yet been incorporated for the next financial year.

 

For now, the RBA is keeping its options open and monitoring both local and international developments before taking its next step.

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