The Reserve Bank of Australia Keeps Interest Rate Steady, Raises Inflation Expectation

By: theblockbeats.news|2025/11/04 11:45:54
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BlockBeats News, November 4th, the Reserve Bank of Australia expects that core inflation will remain above the target range until mid-2026, due to faster-than-expected growth in consumer demand and house prices, which have limited the room for further interest rate cuts. The Reserve Bank of Australia kept the cash rate unchanged at 3.60% on Tuesday as expected, after cutting rates three times this year in February, May, and August. The Reserve Bank of Australia stated that recent data, including stronger economic growth, persistent inflation, and a still tight labor market, indicate that the economy's potential capacity is more limited than previously expected. "These indicators present a complex picture of the financial environment, consistent with the assessment that policy is currently close to neutral."

In fact, the cash rate is already below some models' core estimates of the neutral rate. The bank now expects its closely watched trimmed mean core inflation rate to accelerate to 3.2% by the end of this year, higher than the current 3%, significantly revised up from the previous forecast of maintaining at 2.6% in the coming years. Core inflation is expected to return to the target range of 2% to 3% only by the second half of 2026 and is projected to decrease to 2.6% by the end of 2027. (FX Street)

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