The Reserve Bank of Australia left its main policy rate, the cash rate, unchanged at 4.35 percent at its meeting today, in line with the consensus forecast. Officials increased this rate by 25 basis points in November 2023 but have since left it unchanged. Over this period, officials have noted that previous policy tightening should help return inflation to within their target range of two percent to three percent over the forecast period.

In the statement accompanying today's decision, however, officials expressed concern about recent inflation data, with monthly CPI data showing an increase from 3.6 percent in April to 4.0 percent in May before easing again to 3.8 percent in June. Officials note that inflation is falling more slowly than they had previously anticipated and they reiterated concerns about risks to the outlook. Updated RBA forecasts in the quarterly Statement of Monetary Policy, also published today, show that officials now expect underlying inflation to return to the target range by the end of 2025 but headline inflation to take twelve months longer.

Although officials left policy on hold today, they reiterated that returning inflation to target remains their highest priority. Speaking after the decision, RBA Governor Michele Bullock advised that officials had also considered raising rates at today's meeting but had not considered a rate cut. She also advised that she currently does not expect policy will be loosened in coming months. The RBA's next meeting is scheduled for late September.

The Reserve Bank of Australia is expected to leave its policy rate unchanged at 4.35 percent for a sixth straight meeting after raising it by 25 basis points to the current level in November 2023. In its June meeting statement, the RBA repeated that inflation was easing more slowly than expected and still high. The board expects that"it will be some time yet before inflation is sustainably in the target range (of 2 to 3 percent)." Governor Michele Bullock told reporters that"the board did discuss the case for increasing interest rates" but also said"the case for a cut was not considered." The CPI data for April-June released last week showed the annual consumer inflation rate rose to 3.8 percent from 3.6 percent in the previous quarter while inflation moderated to 3.8 percent in July from 4.0 percent in June in the monthly CPI data.

The Reserve bank of Australia (RBA) announces its monetary policy with regard to interest rates on the first Tuesday of each month with the exception of January when it is on vacation. The RBA is the central bank of Australia and its duty is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. It does this by setting the cash rate to meet an agreed medium-term inflation target, working to maintain a strong financial system and efficient payments system.

The Reserve Bank of Australia's (RBA's) main responsibility is monetary policy. Policy decisions are made by the Reserve Bank Board with the objective of achieving low and stable inflation over the medium term. Other responsibilities include maintaining financial system stability, while at the same time promoting the safety and efficiency of the payments system. The RBA regards appropriate monetary policy as a major factor contributing to the Australian dollar's stability, which in turn leads to full employment and the economic prosperity for Australia.

The RBA is unique among the central banks - it has two boards with complementary responsibilities. The Reserve Bank Board is responsible for monetary policy and overall financial system stability. The Payments System Board has specific responsibility for the safety and efficiency of the payments system.

The RBA sets an interest rate at which it lends to financial institutions. This interest rate then affects the whole range of interest rates set by commercial banks and other institutions for their own savers and borrowers. It also tends to affect the price of financial assets, such as bonds and shares, and the exchange rate, which affect consumer and business demand in a variety of ways. Lowering or raising interest rates affects spending in the economy.

The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, few homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the financial markets, while lower interest rates are bullish.