Reserve Bank of Australia held the cash rate unchanged on Wednesday, saying a
rising unemployment rate and a weak housing market should be sufficient to
dampen activity and inflation. Markets will watch Governor Bullock’s afternoon
press conference for further guidance. The statement said the committee remains
focused on preventing high inflation from becoming entrenched and, with policy
judged to be somewhat restrictive, will continue to take necessary actions to
return inflation to target, including further increases in the cash rate if
upside risks materialize. Australia’s four major banks view the tightening cycle
as complete and expect a pause before any easing. Westpac said higher borrowing
costs and the end of tax concessions for property investors are weighing on the
housing market, illustrating a strong fiscal–monetary interaction. RBA quarterly
forecasts show unemployment is projected slightly higher than three months ago,
though the labour market remains a touch tight.
