19 Mar 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 March meeting.
March 2024 - Article provided by PSK's Chief Investment Officer Chris Lioutas.
The decision was expected given the February statement and given little in the way of data to change the RBA’s settings or outlook.
This was the second meeting of the year, adopting the 6-week interval between meetings and a new writing format regarding the statement.
There were three key points:
- A call out that growth in unit labour costs remains very high, and whilst it has begun to moderate slightly the Board is unsure whether this trend and the increase in productivity trend will be sustained.
- A softer tone on the potential for further rate rises.
- The removal of “…..and will do what is necessary to achieve that outcome” from their statement.
The softer tone is an interesting one in light of prevailing data and the monthly inflation indicator being unchanged on the previous month. Maybe something we’re not seeing in terms of economic and inflation trends or maybe the RBA revising the tone if their intention is simply to keep rates at current levels and remain patient before cutting rates.
Following their announcement, Australian equities were flat, the AUD/USD fell, and Australian bond prices rose (yields lower), with bond investors reading into the tempering of the hawkish language.
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.
