RBA Leaves the Cash Rate at 4.1% and the Door Open for More Hikes

Bob Mason
Updated: Sep 5, 2023, 06:12 GMT+00:00

The RBA left monetary policy unchanged today. Global economic uncertainties, household spending, and inflation forecasts supported a hold.

RBA leaves the cash rate at 4.10% - FX Empire

In this article:


  • The RBA avoided spooking the markets, leaving the cash rate at 4.10%.
  • Despite a deteriorating macroeconomic environment, the RBA left the door open for more rate hikes.
  • The global economy, household spending, the labor market, and inflation will remain focal points.

The RBA Interest Rate Decision

In line with expectations, the RBA left the cash rate at 4.1% this month. The decision to leave the cash rate unchanged shifted the investor focus to the RBA Rate Statement.

Salient points from the RBA Rate Statement included:


  • Inflation has passed its peak but will likely remain too high for some time.
  • Prices for service are driving inflationary pressures, with rent prices contributing.
  • The RBA expects inflation to return to the 2-3% target range by late 2025.

The Economy and the Labor Market:

  • The economy is in a below-trend phase and will likely remain so for some time.
  • High inflation is impacting consumer spending power, weighing on consumption.
  • Labor market conditions remain tight. However, the Board expects the weaker economic environment to push the unemployment rate to 4.5% in 2024.
  • Wage growth has accelerated but remains aligned with the inflation target.


  • Service price inflation has been resilient globally, and Australia may experience a similar trend.
  • The outlook for household spending despite some finding relief from higher house prices, savings, and higher interest income.
  • The Chinese economy.

The Board concluded further monetary policy tightening will remain dependent on data. However, the Board will also assess ongoing risks. The focal points will include the global economy, household spending, and inflation and labor market expectations.

Notably, the RBA did not signal an end to the policy-tightening cycle, leaving the option for more rate hikes on the table.

AUD/USD Reaction to the RBA Decision and Rate Statement

Before the RBA interest rate decision, the AUD/USD rose to a pre-stat high of $0.64646 before sliding to a low of $0.64211.

However, in response to the RBA interest rate decision and rate statement, the AUD/USD fell to a post-decision low of $0.64161 before rising to a high of $0.64303.

This morning, the AUD/USD was down 0.54% to $0.64254.

AUD/USD shows a mixed reaction to the RBA Rate Statement.
050923 AUDUSD 30 Minute Chart

Up Next

Eurozone services PMIs and US factory orders will influence market risk sentiment. A larger-than-expected decline in euro area services PMIs would signal a deteriorating macroeconomic environment. US factory orders may also play a hand in market risk sentiment.

However, ECB and Fed commentary will need consideration throughout the day.

ECB President Lagarde kickstarts the European session. The ECB President will likely stick to the ‘inflation too high’ script. However, ECB Executive Board members could send mixed signals. ECB Executive Board Members Luis de Guindos, Isabel Schnabel, and Edouard Fernandez-Bollo are on the calendar to speak today.

No FOMC members are on the calendar to deliver speeches. However, comments with the media will draw interest. With the markets betting on the Fed hitting the brakes, hawkish chatter would test the dovish Fed bets.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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