RBA holds rates steady but warns of upside risks as inflation persists
The Reserve Bank of Australia board left its cash rate on hold at 4.35% but warned that persistent inflation and slowing economic growth meant it was ruling "anything in or out" on the future path of monetary policy, with risks to the upside remaining.
The central bank's board said the decision to leave the cash rate unchanged did not preclude the need for further adjustments in interest rates, warning it would be "some time yet" until inflation hit the 2 to 3% target, with the board needing "to remain vigilant to upside risks".
"Inflation is easing but has been doing so more slowly than previously expected and it remains high," it said in its post-decision statement, adding that the economic outlook remained uncertain, with recent data demonstrating the process of returning inflation to target "is unlikely to be smooth".
The board noted that momentum in economic activity was weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth. Revisions to consumption and the saving rate and the persistence of inflation suggested that "risks to the upside remain".
"While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation. 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.
Reporting by Frank Prenesti for Sharecast.com