RBA interest rates: Bank board holds cash rate at 4.35pc amid global market turmoil
The nation’s key interest rate has been left unchanged at 4.35 per cent but the Reserve Bank of Australia says fighting inflation is still top priority.
“Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range,” the bank said.
The RBA will give a clear signal of its thinking at a press conference later on Tuesday afternoon.
Markets had overnight priced in a 20 per cent chance of a rate cut — a dramatic change from just over a week ago when there was talk about a potential hike.
Fresh inflation numbers had put that talk to bed in the minds of most investors, however, with the RBA’s preferred measure of prices — the trimmed mean, which strips out volatility — falling slightly. But headline inflation accelerated, blurring the picture.
On Tuesday morning AMP economist Shane Oliver said the RBA should consider cutting rates, warning there was almost a 50 per cent chance of a recession in the US and Australia.
Added to that are troubles in Australia’s biggest trading partners, with Japanese markets frightened and recent downgrades to China’s growth outlook.
Others have been more optimistic.
BetaShares chief economist David Bassanese said he could not “see a reason for a sudden US lurch into recession” — although he said bad news could build momentum.
Moody’s Analytics economist Harry Murphy Cruise this week said that the RBA would be “running their own race” and would be closely watching the impact of tax cuts and cost of living support flowing into the system.
More to come
#RBA #interest #rates #Bank #board #holds #cash #rate #4.35pc #global #market #turmoil