Australia’s RBA holds the line, but rate cuts are a distant prospect

As expected, the RBA kept rates on hold in August. The cash rate has now been unchanged at 4.35% since November last year. The August meeting looked set to be a close-run decision before the release of the Q2 CPI, which surprised slightly to the downside. The RBA’s statement remains vigilant against upside risks to inflation. But once again, the cautious and hawkish messaging has not been backed up with any action.

Access the research report to learn more about the key points outlined below:

• The economy is now out of the ‘danger zone’ where further rate hikes were possible.
• Households will need to be patient in waiting for interest rate relief
• The economy is slowing, but spare capacity is scarce. We do not expect the first rate cut to come until early 2025.