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Australia’s Reserve Bank kept its benchmark interest rate unchanged at 3.60 percent on Tuesday, citing renewed inflationary pressures and uncertainty about the economic outlook despite stronger-than-expected growth in private sector activity.
The Monetary Policy Board’s unanimous decision to maintain current rates signals a cautious approach as officials assess whether recent increases in underlying inflation will persist or prove temporary. The central bank noted that inflation, while substantially lower than its 2022 peak, has picked up in recent months.
“The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,” the Board stated in its official release following the meeting.
The decision comes as Australia’s economy shows unexpected resilience. Private consumption and investment have strengthened, housing market activity continues to accelerate, and financial conditions have eased since the beginning of the year. However, the full effects of earlier interest rate reductions have yet to flow through to demand, prices, and wages.
Labour market conditions remain tight, according to the statement, though unemployment has risen gradually over the past year. Business surveys indicate significant difficulty sourcing workers, while unit labour costs remain elevated despite some easing in the official Wage Price Index.
The Reserve Bank acknowledged substantial uncertainty in both domestic and global economic conditions. Officials expressed particular concern about stronger-than-anticipated momentum in the private sector, which could add to capacity pressures if the trend continues.
The Board indicated it will continue monitoring global economic developments, financial markets, domestic demand trends, and inflation and labour market indicators as it assesses future policy decisions.
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