The Reserve Bank of Australia has held the official cash rate at 4.35% after three rate hikes earlier this year, while warning it could raise rates again if needed to bring inflation back to target.
The widely expected decision came as falling property values in Sydney and Melbourne spread to Brisbane, Perth and Adelaide following the earlier rate increases.
Economists and financial markets had unanimously forecast no change following the latest two-day RBA board meeting.
In a statement accompanying the decision, the RBA board said that following this year's three rate hikes, “the economy appears to be slowing as expected”, but warned that it “will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise”.
All board members voted to keep the cash rate unchanged, while acknowledging that “inflation is still too high”.
Headline inflation stood at 3.8% in the year to June and is not expected to return towards the 2.5% target until late 2027. The board said “there are upside risks to this projection”.
“With monetary policy judged to be somewhat restrictive, the board decided to leave the cash rate target unchanged while it assesses how the economy is evolving,” the statement said.
RBA Governor Michele Bullock will hold her regular press conference at 3.30 pm AEST in Sydney.
