The Reserve Bank of Australia (RBA) has kept the cash rate on hold at 4.35%.
The RBA is Australia’s central bank. It meets eight times a year to adjust interest rates to keep inflation in check.
In its statement today, the RBA said that the inflation rate was “still too high”.
However, it noted “financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected,” following three consecutive rate rises earlier this year.
Interest rates
The cash rate is what the RBA charges banks for short-term loans.
We usually refer to changes in the cash rate as the RBA changing interest rates, because the cash rate affects interest rates across the economy, including home loans.
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The higher the interest rate, the more expensive it is to spend and borrow money (increasing mortgage repayments).
The idea is that making it more expensive to borrow will slow spending and, in turn, the growth of inflation.
Latest decision
While it said “inflation is still too high,” the RBA Board “judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.”
The central bank had held the cash rate steady at 3.6% for four meetings in a row before lifting rates three times this year.
All members of the RBA Board voted to keep the rate on hold at today’s meeting.
