RBA Keeps Rates Steady Amid Sluggish Productivity Growth

The Reserve Bank of Australia (RBA) has kept interest rates steady for the second-straight meeting, citing that the economy's slow productivity growth is capping its potential expansion.

According to the RBA's latest macroeconomic forecasts, released simultaneously with its rate decision on Tuesday, Australia's productivity growth has been downgraded from 0.2% in 2026 to a decline of 0.5%. This marks nearly a year since the bank last revised its medium-term productivity forecast, which was cut from 1% to 0.7%.

RBA Governor Michele Bullock expressed concern over Australia's stagnant productive capacity, stating that the central bank can only set monetary policy to deliver low and stable inflation, rather than actively addressing the issue of weak productivity.