At its most recent meeting, the Reserve Bank of Australia opted to keep interest rates at their current level of 4.1% for the second consecutive month. It pointed out that earlier hikes were implemented in an effort to lower demand but cautioned against the likelihood of more actions being taken to control inflation.
According to the RBA's August projections, headline inflation is likely to drop from its current level of 6% to its target range of 2-3% by the end of 2025.
Recent figures show lower inflation and weaker consumer expenditure, yet some economists are forecasting a rate hike.
The Australian dollar resumed its downward trend, while futures are signaling a minimal likelihood of additional rate hikes in the near future.
Philip Lowe, the Governor of the RBA, emphasized that rate hikes are helping to restrain demand and will continue to be utilized going forward. In his speech, he also chose not to make any reference to the "narrow" road that leads to a gentle landing, instead concentrating on the data and the hazards.
Despite the fact that the RBA anticipates a slowing in economic growth to 1.75 percent the next year and a rate of unemployment of 4.5 percent, some analysts feel that the rate hike could be postponed for a prolonged period of time.
Nevertheless, there is still a possibility that inflation in service prices, such as rents, could remain elevated. Both the job market and housing prices are also not slowing down as anticipated.
Given the nation's relatively low inflation rate, market analysts are surprised by the RBA's flexible stance, even though both the National Bank of Australia and Goldman Sachs have suggested a rate hike in November. The bank's decision to tighten monetary policy in the future will be heavily influenced by economic and labor market statistics.
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