The Reserve Bank of Australia has held its cash rate target at 4.35% at its August 2024 Board meeting, maintaining borrowing costs at their current level as the Board assessed that underlying inflation remained too high to support a pivot toward easing. The decision was published on the RBA's website on 6 August 2024, accompanied by the Board's latest statement outlining its assessment of economic conditions and the rationale for keeping policy unchanged.
Underlying inflation — the RBA's preferred measure for gauging persistent price pressures, which excludes the largest price rises and falls in each period — was 3.9% over the year to the June quarter, sitting above the central bank's 2–3% target band. The Board noted that while headline inflation had moderated from its earlier peaks, the persistence of domestic services inflation and a larger-than-expected gap between demand and supply meant that conditions did not yet warrant a reduction in the cash rate. The August decision extends a period of policy stability that began after the RBA lifted the cash rate to 4.35% in November 2023.
RATE PATH SINCE 2022
The RBA raised the cash rate from the low of 0.10% set during the pandemic, reaching 4.35% in November 2023 through a series of increases that began in May 2022.
BULLOCK PUSHES BACK ON NEAR-TERM CUT
Although market pricing pointed to rate cuts by the end of 2024, Governor Michele Bullock said after the meeting that a near-term rate cut did not align with the Board's thinking. The Board emphasised that returning inflation sustainably to the 2–3% target band within a reasonable timeframe is the overriding priority and that it is not yet sufficiently confident in the trajectory of underlying inflation to begin withdrawing the existing degree of monetary restraint. The RBA indicated that it would continue to monitor all incoming economic data and that future decisions would be made meeting by meeting based on the evolving assessment.