Reserve Bank on hold at final meeting for 2023 – cash rate remains unchanged at 4.35 per cent

Australian mortgage holders have been gifted an early Christmas present as the Reserve Bank chooses to leave interest rates untouched.

The board has decided to leave the cash rate at 4.35 per cent at the December meeting in a move most forecasters saw coming.

The pause follows 425 basis points of increases to the cash rate since May last year, which have been pushing up repayments for variable-rate mortgage holders.

The central bank has been lifting interest rates to bring down inflation, which has been moderating but remains well below the two-three per cent target range.

In a post-meeting statement, RBA governor Michele Bullock again left the door open to more tightening in coming months.

“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable time frame will depend upon the data and the evolving assessment of risks,” Ms Bullock said.

The December call followed a month of softer data, including a convincing slowdown in the monthly inflation gauge – which is not as comprehensive as the quarterly version – to 4.9 per cent in October, from 5.6 per cent in September.

A weaker retail sales report suggests consumers are cautious, and unemployment and underemployment rates are gradually moving higher, as expected.

Monetary policy meetings are set to resume in February.

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Poppy Johnston
(Australian Associated Press)


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