Australia’s Central Bank Holds Interest Rates Steady in Line with Market Expectations

Forex - The Reserve Bank of Australia (RBA) indicated that risks to inflation continue, and in line with market expectations, did not make any changes to the policy interest rate during its last meeting of the year. According to the statement from the RBA, the benchmark interest rate was maintained at 4.35%.

The statement noted that the latest forecasts published in the November Monetary Policy report do not anticipate a sustainable return of inflation to the midpoint of the target by 2026, adding, "The Board is gaining some confidence that inflationary pressures are easing in alignment with these latest forecasts, but risks persist."

The statement continued: "Considering the latest data, the Board's assessment is that monetary policy remains restrictive and is functioning as expected. While some upward risks to inflation appear to have diminished, the overall demand level still seems to be above the economy's supply capacity, although this gap continues to close."

The Board reiterated that returning inflation to target in a reasonable timeframe remains the highest priority.