Australia’s central bank has kept its interest rate unchanged at 4.35% for the seventh consecutive meeting, marking a 12-year high, as it prioritizes returning inflation to target. The decision, made by the Reserve Bank of Australia (RBA) under Governor Michele Bullock, reflects a commitment to maintain a restrictive policy until inflation shows sustainable progress towards the target range. The last interest rate change occurred in November 2023, when rates were increased by 25 basis points.

Bullock indicated that a rate cut is unlikely in the near term, despite expectations that inflation may temporarily decrease due to government measures. However, sustainable returns to the target inflation level are not anticipated until 2026. The RBA remains vigilant to potential inflation risks and has not ruled out future policy adjustments.

Economist Marcel Thieliant from Capital Economics noted that this marks the first time since March that the RBA did not consider a rate hike. While the possibility of an earlier rate cut is emerging, Thieliant maintains that the RBA is unlikely to ease policy before the second quarter of 2025.