RBA keeps interest rates steady at 4.35 per cent

The Reserve Bank of Australia has decided to leave interest rates on hold at its first meeting of 2024 after inflation fell by more than expected towards the end of 2023.

It means the cash rate target remains at 4.35 per cent.

The decision to keep rates on hold had been widely anticipated.

Numerous economists expect the RBA to start cutting rates in the second half of this year as inflation continues to moderate.

Inflation was running at an annual pace of 4.1 per cent in the December quarter, down from 7.8 per cent 12 months earlier.

The RBA board said despite inflation easing, it still remained higher than it should.

It noted that it would be “some time” before inflation was sustainably back within its 2-3 per cent target range, leaving open the option of a further interest rate increase.

“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out,” it said.