ABC and AAP reported that Australia’s central bank, the Reserve Bank (RBA), decided to freeze the current base interest rate at 4.35% on the 5th.
According to the media, the RBA held a regular financial policy meeting on this day and decided to maintain the base interest rate, which was raised by 0.25 percentage points for the first time in five months last month.
As the inflation rate slowed more than expected in October, the market generally expected the base interest rate to be frozen.
The central bank reiterated that the economic indicators released since November were generally as expected, and that whether additional interest rate increases will be necessary will depend on the data received in the future.
The RBA cited a broad slowing trend in inflation and the delayed ripple effect of financial austerity from May 2022 to November 2023 as reasons for freezing the base rate.
The media pointed out that the slowdown in inflation and labor market flexibility confirmed that the effects of financial austerity were being exerted.
Central Bank Governor Michelle Bullock said, “This interest rate freeze allows us time to assess the impact of interest rate increases on demand, inflation, and the labor market.”
“Data and risk assessments will determine whether further tightening of monetary policy is necessary to ensure that inflation returns to target within a reasonable time frame,” Bullock said.
The Central Bank of Australia froze the base interest rate four times in a row, then raised it by 25 basis points (0.25 percentage points) in November.
Governor Bullock later stated that domestic demand was pushing up prices and that a more drastic response through interest rates was needed.
The next financial policy decision meeting is scheduled to be held in February next year. The probability of a 25bp increase in the base interest rate by March next year, predicted by the market, has decreased from 43% to 38%.
After the interest rate freeze was announced, the Australian dollar temporarily fell by 0.5% and was traded at 1 Australian dollar = 0.6581 dollars.
Additionally, the 3-year bond interest rate, which is sensitive to interest rate policy, fell 5 basis points (0.05 percentage points) to 3.995%.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.