RBA: Interest rate decision | Sky News Australia

Australians are anxiously waiting as the Reserve Bank decides whether to raise interest rates again.

It’s widely expected the central bank will hold the cash rate steady at 3.6 per cent at Tuesday’s board meeting. If so, it would be the second month in a row after 10 consecutive rises.

The pause – decided at the board’s April meeting – was designed to give borrowers time to catch their breath as banks continue to roll out the hikes.

Board minutes from April show the board ultimately agreed on a wait-and-see approach, given that the “full effects … on the economy are yet to be observed given the lags in the transmission of monetary policy”.

In April, board members noted that the 10 consecutive rate rises had contributed to a slowdown in the housing market, a material slowing in consumption and “financial pressure for a segment of households with housing loans”.

Despite that, the minutes show an overarching commitment from the RBA board to do whatever is necessary to tame inflation.

Inflation is running at 7 per cent for the 12 months in the March quarter, still well above the 2 to 3 per cent target that the RBA aims for but down from the 30-year-high of 7.8 per cent in the December quarter.

Despite low unemployment, a strong population growth has likely factored into inflationary pressures and therefore the RBA’s decision.

Tuesday’s meeting is the first since the government-ordered independent review of the Reserve Bank was handed down. It recommended the central bank only be able to consider interest rates eight times a year, instead of 11.

The review also recommended the central bank be divided into two boards – one to solely focus on monetary policy, the other on governance.

The government has agreed in principle to all 51 recommendations of the review.

Originally published as RBA to hand down latest interest rate decision after May board meeting

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