Australia’s central bank has elected to keep interest rates at current levels as inflation persists across the country.
The Reserve Bank of Australia (RBA) kept its trendsetting interest rate at a 12-year high of 4.35% and stressed the need to remain vigilant on inflation.
“While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation,” the central bank said in a news release.
The inflation rate in Australia is currently at an annualized 3.6%, well above the central bank’s 2% target.
Futures traders have reduced the likelihood of an interest rate cut at the central bank’s final meeting of this year in December to 44% from 65% previously.
However, an interest rate cut is fully priced in for April 2025.
The need for interest rate cuts in Australia has become complicated by anemic economic growth in the country.
Australia’s economy grew only 0.1% in this year’s first quarter, while wage growth and job creation have largely stalled.
Economists are hoping that cost-of-living relief from Australia’s federal government, including electricity rebates, will help to lower inflation in the second half of this year.
The Reserve Bank of Australia’s next policy meeting is scheduled for August 5 and 6.