Australia’s central bank will keep interest rates stable on Tuesday as a resilient labor market continues to keep inflation high, economists polled by Reuters said.
Economists in a Reuters poll postponed expectations of the first cut to the second quarter of next year.
The RBA is the only central bank among its peers that has not yet begun to lower the cost of borrowing, partly because it raised benchmark interest rates by a relatively modest 425 basis points between May 2022 and November 2023.
Inflation, which the RBA targets at 2%-3%, fell to 2.8% in the previous quarter from a peak of 7.8% in late 2022, as global supply chains piled up in the wake of the pandemic.
But core inflation remains stubbornly high at 3.5%, and with the unemployment rate near record lows, the RBA is likely to prefer keeping interest rates high for longer.
All 44 economists in a Reuters poll conducted from November 28 to December 5 expected the Reserve Bank of Australia to keep its policy rate at 4.35% at the end of its two-day policy meeting on December 10.
A majority of more than 60%, 25 out of 40, expected the RBA to first cut interest rates by 25 basis points in the second quarter of 2025 to 4.10%, compared with a majority that said in the first quarter in a November poll.
Three of the major domestic banks in the survey – ANZ, NAB and Westpac – shared this view, while the Commonwealth Bank of Australia expected the first cut in the first quarter of 2025.
