The RBA’s decision on the reference rate
The Reserve Bank of Australia (RBA) recently confirmed its benchmark rate at 4.35% during its last meeting in 2024. This decision marks the ninth consecutive meeting in which financing costs remain unchanged, in line with market forecasts. Rate stability is a response to current economic conditions, which see general inflation falling, but with underlying inflation continuing to cause concern
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Inflation and future prospects
Despite the decrease in overall inflation, the RBA has warned that underlying inflation remains too high. Experts predict that it will be some time before inflation reaches the 2-3% target, set for 2026. However, the central bank’s board expressed confidence that inflation is following a sustainable path toward the target. This optimism is crucial for the future decisions of the RBA, which will continue to closely monitor economic data and geopolitical risks
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Implications for the market and the global economy
The RBA decision has significant implications not only for Australia, but also for the global economy. With the increase in geopolitical tensions and economic uncertainties, the RBA has emphasized the importance of basing its decisions on concrete data and on the evolution of risks. In addition, the focus is now shifting to other economies, such as the Chinese one, where imports and exports have failed market expectations. This scenario could influence the decisions of central banks around the world, including the European Central Bank (ECB) and the Federal Reserve (Fed).
