The Reserve Bank of Australia (RBA) has maintained its official cash rate at 4.35% for its first meeting of 2024, echoing a similar decision made at the end of 2023. This decision raises questions about the RBA's approach to managing inflation compared to other central banks that have actively adjusted their rates.
At its first meeting of 2024, the Reserve Bank of Australia board held the official cash rate steady at 4.35 per cent. This decision follows the board's final meeting of 2023, where they also kept the cash rate at 4.35 per cent. Some might question the inactivity of the country's most important financial institution over the past year. The RBA, acknowledging its limited tool to manage inflation, the cash rate , kept it unchanged throughout the year.
In contrast, other central banks, like the US Federal Reserve, Canada, England, New Zealand, Mexico, Sweden, and Switzerland, all adjusted their key lending rates. While some central banks, like Norway and India, maintained their rates similarly, the RBA's lack of action stands out. Since 2010, the RBA board has kept rates steady after 114 out of 152 meetings, including a three-year period between 2016 and mid-2019. The last rate adjustment occurred in November 2023, when the cash rate was lifted to 4.35 per cent. At that time, inflation was at 5.4 per cent, and underlying inflation was 5.1 per cent. More recent figures from the Australian Bureau of Statistics show inflation at 2.8 per cent, partly due to government energy subsidies, while underlying inflation is at 3.5 per cent. Economic growth for the 12 months ending September remained stagnant at just 0%
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