Reserve Bank of Australia Maintains Cash Rate

Reserve Bank of Australia (RBA) Governor Michele Bullock has indicated that Australia is not cutting interest rates as aggressively as other countries due to its unique domestic economic conditions. Bullock emphasized that Australia has a floating exchange rate, allowing it to tailor its interest rates to local circumstances, unlike countries like the U.S., New Zealand, and Canada, which have faced higher inflation and rising unemployment. Despite rising pressure to ease lending costs, the RBA has kept the cash rate on hold for the seventh consecutive meeting, focusing on bringing inflation back down to the target range of 2-3 percent. Bullock acknowledged the challenges faced by Australian households, who are currently paying an extra $5.5 billion per month in mortgage repayments. She stated that while the RBA understands the distributional impacts of interest rate policies, it has only one tool at its disposal. The current forecast suggests that inflation may not sustainably return to the target band until 2026.