With everyone’s Christmas Wish List topped with ‘no December interest rate rise’, the Board’s decision today to leave the cash rate target unchanged at 4.35 per cent is a relief to many.
Last month saw the first rate rise in four months, with interest rates increased by 25 basis points as inflation was not declining at the expected rate. With the impact of that rate rise beginning to be felt, today’s decision to leave the rate unchanged is sure to help when the Christmas credit card bills start rolling in early next year.
In announcing today’s decision, the Reserve Bank Governor Michelle Bullock said, “Higher interest rates are working to establish a more sustainable balance between aggregate supply and demand in the economy. The impact of the more recent rate rises, including last month’s, will continue to flow through the economy. High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market.”
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