Australia Interest Rate

The Reserve Bank of Australia mulled a 25bps hike in interest rates before eventually deciding to hold the cash rate unchanged at 4.1% for the third straight month, minutes of the central bank’s September meeting showed. The case to raise borrowing costs was based on the expectation that inflation would remain above the bank’s target for a prolonged period if productivity growth does not pick up as anticipated or if high services price inflation persists. Meantime, the case to maintain borrowing costs relied on the observation that interest rates had been increased significantly and its effects were yet to be fully realized. Members also noted that there was a risk the economy could slow more sharply than forecast. "Members agreed that the case to keep the cash rate target unchanged at this meeting was the stronger one," the minutes said. The board reiterated that some further tightening may be needed, adding that the move will be guided by the incoming data.