Homeowners wait continues as RBA Holds Interest at 4.10%

Sydney, April 1, 2025 – The Reserve Bank of Australia (RBA) has decided to keep the cash rate target steady at 4.10% in its latest monetary policy decision, citing continued progress in reducing inflation. The interest rate on Exchange Settlement balances remains unchanged at 4.0%.

Inflation Moderation and Policy Outlook

The RBA noted that inflation has significantly declined from its 2022 peak, aided by higher interest rates bringing demand and supply into better balance. While underlying inflation continues to ease in line with February’s forecasts, the central bank remains cautious, emphasizing the need for further confidence in inflation returning to the target band.

“The Board is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome,” the RBA stated.

Economic Uncertainty and Labour Market Trends

Despite improvements in real household incomes and easing financial stress, some sectors are struggling to pass on rising costs to consumers due to weak demand. Labour market conditions remain tight, even with a slight employment decline in February. Although wage pressures have eased more than anticipated, weak productivity growth continues to pose risks to unit labour costs.

The RBA highlighted uncertainties around domestic consumption growth and employment trends. A slower-than-expected recovery in spending could lead to subdued output growth and increased labour market weakness. Conversely, stronger-than-expected labour market outcomes could push inflationary pressures higher.

Global Risks and Monetary Policy Considerations

The Board acknowledged significant global uncertainties, including the economic impact of new U.S. tariffs, potential retaliatory measures, and geopolitical tensions. These factors could dampen global economic activity, leading to shifts in inflation trends. While several central banks have eased policy this year, the RBA remains watchful of evolving global risks.

RBA’s Future Policy Direction

Reaffirming its commitment to price stability and full employment, the RBA described its current policy stance as restrictive but necessary. The Board will continue to assess incoming economic data, international developments, and domestic trends to guide future decisions.

Financial markets and analysts will closely monitor upcoming economic indicators to gauge potential shifts in RBA policy in the months ahead.