The Reserve Bank of Australia (RBA) has increased the cash rate target by 25 basis points to 3.6% as expected at today’s policy meeting. It also increased the interest rate on Exchange Settlement balances by 25 basis points to 3.5%.
Global inflation remains very high, and RBA Governor, Philip Lowe says it will be some time before inflation is back to target rates. He says the outlook for the global economy remains subdued, with below average growth expected this year and next.
The RBA also says the monthly Consumer Price Index (CPI) indicator suggests that inflation has peaked in Australia, and is expected to moderate over the months ahead due to both global developments and softer demand in Australia.
The RBA reasoned that rents are increasing at the fastest rate in some years, with vacancy rates low in many parts of the country, and the central forecast is for inflation to decline this year and next, to be around 3% in mid-2025.