RBA Keeps Cash Rate Steady Amid High Inflation Concerns

The Reserve Bank of Australia (RBA) has maintained its official cash rate at 4.35%, as widely expected, following three hikes earlier in the year. The RBA pointed to rising unemployment and a weak property market as factors influencing its decision.

In its statement, the RBA noted that global oil supply disruptions are adding to inflation, with fuel prices being passed through to other goods and services. This is contributing to high inflation, which is expected to remain so for some time. The board also acknowledged capacity pressures in the economy as another factor driving inflation.

The RBA emphasized its focus on preventing high inflation from becoming embedded in the economy. To achieve this, it aims to maintain subdued growth in aggregate demand to reduce capacity pressures and bring inflation back to target. Despite financial conditions being tighter than before and the economy slowing as expected, inflation remains too high.

RBA Governor Michele Bullock took a hawkish tone when speaking with reporters after the announcement. She suggested that it is 'quite possible' rates will be lifted if needed, emphasizing the bank's willingness to act if necessary.