25 Sep 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 September meeting.
September 2024 - Article provided by PSK's Chief Investment Officer Chris Lioutas.
Given the significant change in rhetoric and plenty of new content in the August statement, this statement was largely unchanged.
However, we felt there were some points of emphasis in this statement, including:
- Very subtly pushing out their expected timeframe for the inflation target being met to 2026
- Growth in aggregate consumer demand, led by students and tourists, remains resilient
- Wage pressures have eased, but labour productivity is only at 2016 levels
- The labour market is still too tight
- Use of the word "sustainably" returning inflation to target within a reasonable timeframe - i.e. softer language
- Providing clarity on their focus - underlying inflation over headline inflation (which may fall in the short term).
The board maintained that monetary policy would need to remain restrictive (i.e. maintaining higher rates) for some time in order to meet their objectives.
Following the announcement, Australian equities rose, the AUD/USD fell, and Australian bond yields fell (prices moved higher). We think investors read a softer stance in the tone of the statement.
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.
