Canberra, April 4 (IANS) The Reserve Bank of Australia (RBA) announced on Tuesday that the cash rate target will remain unchanged at 3.60 per cent and the interest rate on exchange settlement balances will also remain unchanged at 3.50 per cent.
The decision to leave the cash rate on hold is the first time in a year after 10 consecutive rises, which raised the interest rate by 3.5 percentage points since May last year in a bid to curb the skyrocketing inflation, reports Xinhua news agency.
According to latest data from the Australian Bureau of Statistics, the monthly Consumer Price Index (CPI) indicator increased 6.8 per cent in the 12 months to February, down from 7.4 per cent annual growth in January and the peak of 8.4 per cent last December.
The RBA said the decision is in a bid to provide further time to analyse the impact of the interest rate increase and the economic outlook, with a lag in the monetary policy suggesting the full effect of the interest rate increase is yet to be felt.
Despite the temporary ease on the interest rate hike, RBA Governor Philip Lowe reaffirmed that some further tightening of monetary policy may well be needed to ensure that inflation returns to target.
“The board is seeking to return inflation to the 2-3 per cent target range while keeping the economy on an even keel. In assessing when and how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market,” the Governor added.