6 Feb 2024
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The Reserve Bank of Australia (RBA) Board has decided to leave the cash rate unchanged at 4.35% at its February meeting.
February 2024 - Article provided by PSK's Chief Investment Officer Chris Lioutas.
The decision was expected even with recent data showing December quarter inflation coming in well below expectations.
The statement released by the RBA received a new format with more reader friendly headings breaking up the release into sections.
Key points were as follows:
- Goods inflation continues to ease whilst services inflation declines at a more gradual pace, which is consistent with continuing excess demand in the economy and labour cost pressures
- Inflation is adversely affecting people’s real incomes resulting in weak household consumption growth and dwelling investment
- The Board remains firmly focused on inflation risks – they expect inflation to return to within band (2-3%) in 2025 and to the midpoint (2.5%) in 2026
- The Board re-emphasised that returning inflation to target remains its highest priority
- Whilst recent data shows inflation easing, it remains high, and the Board expects it will be some time before inflation is sustainably in the target range.
None of this language was surprising, but it may have dashed some hopes for any early signs of easing.
Following their announcement, Australian equities are flat, the AUD/USD rose slightly, and Australian bond prices fell slightly (yields higher).
As always, if you have any questions or your personal circumstances have changed please do not hesitate to contact your financial adviser
General Advice Warning - Any advice included in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.
