The Reserve Bank of Australia (RBA) has left the cash rate on hold at 4.35% for the fourth consecutive meeting, as was widely expected.
This is despite increased concern about inflation, which accelerated in the March quarter. The RBA Board stated that inflation “continues to moderate but is declining more slowly than expected” and they “will remain to vigilant upside risks”. This indicates that further rate rises cannot be ruled out.
The Board also noted that inflation in the near term is “forecast to be higher because of the recent rise in domestic petrol prices, and higher than expected services price inflation”.
Some analysts have called for spending restraint in the upcoming federal Budget of 14 May and Treasurer Jim Chalmers has stated that there would not be “free-for-all spending” but neither would there be “scorched-earth austerity”.
