Interest rates have been left on hold by the Reserve Bank which is keeping its options open on future moves, with neither a cut nor a hike ruled out.

The central bank has again left its target cash rate at 4.35 per cent, where it has sat since November, as widely anticipated by economists.

Posturing on future interest rate moves was largely unchanged from the RBA’s previous meeting, with board members still “not ruling anything in or out” and choosing to stay responsive to incoming data.

“Inflation is easing but has been doing so more slowly than previously expected and it remains high,” the board said in its post-meeting statement on Tuesday.

“While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation.

“The path of interest rates that will best ensure that inflation returns to target in a reasonable time-frame remains uncertain and the board is not ruling anything in or out.”

The uncontroversial call followed two days of meetings where board members dissected the latest data, as well as the economic significance of state and federal budgets and the workplace umpire’s minimum wage decision.

The post-meeting statement highlighted a sluggish economy, as seen in the March quarter national accounts, the unemployment rate trending higher and slower-than-expected wages growth.

Yet “risks to the upside remain” with inflation persistent and national accounts including upward revisions to household consumption.

“There is uncertainty around consumption growth,” the statement read.

On the question of the inflationary impact of state and federal budgets, the board said they may “have an impact on demand, although federal and state energy rebates will temporarily reduce headline inflation”.

The RBA started hiking interest rates in 2022 as inflation moved above its target range of two to three per cent and kept climbing.

The economy has slowed significantly since the aggressive hiking cycle began, lowering demand for goods and services and easing pressure on prices.

Inflation has fallen from its peak of 7.8 per cent in late 2022, but the 3.6 per cent rise clocked in the year to March remains outside the target band.

Most economists believe the next move will be a cut in interest rates, with the economy sluggish and price pressures easing – albeit not as quickly as hoped.

The vast majority of a Reuters poll released ahead of the interest rate decision – 38 of the 43 – expected no change in the next quarter before cuts began in the final three months of the calendar year.

Poppy Johnston
(Australian Associated Press)