The number: The Reserve Bank of Australia held the official cash rate at 4.1 per cent, as widely expected by the financial market and economists.
What was said: “Uncertainty about the outlook abroad also remains significant. Many central banks have eased monetary policy since the start of the year, but they have become increasingly attentive to the evolving risks from recent global policy developments.
“Sustainably returning inflation to target within a reasonable timeframe is the board’s highest priority. The continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the board is cautious about the outlook. The board will rely upon the data and the evolving assessment of risks to guide its decisions.”
Why it matters: The central bank reduced the cash rate last month in a line ball decision after inflation slowed sufficiently to warrant the first rate cut in nearly five years. Even so, governor Michele Bullock has repeatedly warned not to expect a series of rate cuts because the strong jobs market could threaten a sustainable return of inflation to target.
What has changed: A favourable monthly inflation report in February showed core inflation inching closer to target and a surprise dip in the labour market has reinforced expectations the RBA will cut again in May.
What’s next: RBA governor Michele Bullock will hold a media conference at 3.30pm which is expected to provide more insights into the board’s decision-making.
