The RBA's Board kept the cash rate and interest rate on Exchange Settlement balances steady after a recent increase. This decision aimed to balance inflation concerns with economic growth. The economy showed stronger-than-expected growth but also signs of slower progress in reaching the inflation target. Inflation has been higher than predicted, especially in services, while the labor market, though tight, has eased slightly. Housing prices and new mortgages continued to rise, impacting inflation risks.
Recent data on the economy aligned with expectations: inflation is moderating, especially in goods, while indicators for services inflation remain unclear. Wage growth increased due to a previous decision on award wages but is not expected to rise significantly without improvements in productivity. The Board emphasized the need to stabilize the economy with the recent interest rate hikes but acknowledged their impact on consumer spending and housing investments.
The primary focus remains on bringing inflation back within the target range to sustainably balance the economy. High inflation adversely affects savings, household budgets, business planning, and income equality. While current medium-term inflation expectations align with targets, uncertainties persist, particularly in services inflation domestically and global economic outlooks, notably regarding China and international conflicts.
Future policy decisions regarding tightening monetary measures depend on evolving data, especially on inflation, labor market conditions, global economic trends, and household consumption. The Board is committed to using necessary measures to achieve the inflation target, considering various economic uncertainties.