Australia’s central bank left its benchmark rate unchanged on Tuesday, with governor Philip Lowe saying that while “the peak of inflation had passed”, the economic outlook remained uncertain.
The move comes after last month raising the benchmark rate by 25 basis points to 4.1%, its highest level since May 2012.
Philip Lowe on Tuesday described the uncertainty surrounding the economic outlook as one of the reasons for the decision to leave the rate unchanged. This will give some time to assess the impact of the rise in interest rates to date and the economic outlook, he said.
The move gave the equity market a slight boost, with the benchmark ASX 200 index up almost 0.5% after the announcement, although the local dollar fell against the US greenback.
Borrowers who had suffered from an increase in their monthly repayments with the rise in rates will thus benefit from a respite.
According to official figures published last week, inflation fell to 5.6% on an annual basis from 7.3% in May 2022, but this level still remains well above the monetary authorities’ target of between 2 and 3%.
Many central banks have opted to continue tightening monetary policy in an attempt to control soaring food and energy prices, exacerbated by the war in Ukraine.
In the United States, Federal Reserve Chairman Jerome Powell said last week that further hikes were likely, after the bank left rates unchanged at its June meeting after 10 consecutive hikes.
In its most recent decision at the end of May, the Central Bank of New Zealand raised its rate from 5.25% to 5.5%.