Australia Keeps Key Rate Unchanged As Expected

(RTTNews) - The Reserve Bank of Australia left its benchmark rate unchanged, as widely expected, but cautioned about pronounced geopolitical uncertainties.

The policy board of the RBA, governed by Michele Bullock, decided to maintain the cash rate target at 4.10 percent.

In February, the bank had reduced the rate by 25 basis points, which was the first cut since 2020.

The interest rate paid on Exchange Settlement balances was also retained at 4 percent today.

"The Board's assessment is that monetary policy remains restrictive," the bank said.

"The continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook," the bank added.

The board reiterated that it is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.

Policymakers cautioned that geopolitical uncertainties are pronounced. These developments are likely to have an adverse effect on global activity, particularly if households and firms delay expenditures, the board noted.

Capital Economics economist Marcel Thieliant said Bank's communication on balance suggests that it won't be long before the Bank will ease policy further.

The economist expects the RBA to deliver another 25 basis point reduction at the next meeting in May.

However, the easing cycle will be shallower than most anticipate despite the bank becoming increasingly confident that inflation will sustainably return to the target.