Interest rates remain unchanged as the Reserve Bank of Australia (RBA) left the cash rate target at 4.35 percent following its meeting today.
In a statement it said inflation had fallen substantially since the peak in 2022, but was still above the 2–3 percent target range.
It said, in underlying terms, inflation was 3.9 percent over the year to the June quarter, broadly as forecast in the May Statement on Monetary Policy.
“Headline inflation declined in July, as measured by the monthly CPI indicator (and) is expected to fall further temporarily, as a result of federal and state cost of living relief.
“However, our current forecasts do not see inflation returning sustainably to target until 2026,” it said.
It said wage pressures had eased, but labour productivity was still only at 2016 levels.
“Broader indicators suggest that labour market conditions remain tight, despite some signs of gradual easing.
“Over the three months to August, employment grew on average by 0.3 percent per month.”
It said the unemployment rate remained at 4.2 percent in August, up from the trough of 3.5 percent in mid-2023.
“But the participation rate remains at record highs, vacancies remain elevated and average hours worked have stabilised.
“Taken together, the latest data do not change the Board’s assessment at the August meeting that policy is currently restrictive and working broadly as anticipated.”
