On the afternoon of October 3rd, the Reserve Bank of Australia announced its decision to continue the pause on interest rate hikes for this month, maintaining the cash rate at 4.1%. This meeting was also the first chaired by the new Governor, Michele Bullock.
Sean Langcake, Head of Macroeconomic Forecasting at BIS Oxford Economics, stated that despite relatively high inflation, which is above the target range, the reasons for raising interest rates are not stronger than they were in the past three months. Therefore, they decided to keep the interest rates stable. The current cash rate of 4.10% is considered sufficient to curb demand.
In August, the Consumer Price Index (CPI), an indicator of inflation, rose from 4.9% in July to 5.2%.
The main drivers of inflation this month include housing, food and non-alcoholic beverages, transportation, and financial services.
Michelle Marquardt, Head of Prices Statistics at the Australian Bureau of Statistics, mentioned that items with volatile prices such as fuel, fruits, vegetables, and holiday travel often have a significant impact on the inflation rate. However, when these factors are excluded, it is evident that inflation has decreased on a monthly basis.
Overall, inflation has decreased in several sectors, including housing.
The annual increase in housing was 6.6%, lower than the 7.3% increase in July. New dwelling prices rose by 4.8%, the lowest annual increase since August 2021, reflecting the easing of price increases in building materials and improved supply conditions. Rent prices increased by 7.8% in the 12 months to August, up from 7.6% in July, indicating a tight rental market.
Many economists believe that we have reached the peak of cash rates, and they are expected to remain stable for some time, even with minor fluctuations in the CPI.
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