RBA leaves cash rate unchanged at 4.35%, as expected

• Prior 4.35%
• Inflation continues to moderate, but is declining more slowly than expected
• The economic outlook remains uncertain
• Recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth
• Persistence of services inflation is a key uncertainty
• Household consumption growth has been particularly weak
• There also remains a high level of uncertainty about the overseas outlook
• It will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks
• Not ruling anything in or out on future decisions
• Full statement

The aussie has fallen as the RBA leaves rates unchanged and then offers a more or less similar language to the March statement. The key passage on forward guidance is little changed but for this one bit. In March, they said that:

“While recent data indicate that inflation is easing, it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range.”

Today, they mention that:

“Recent data indicate that, while inflation is easing, it is doing so more slowly than previously expected and it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks.”

In short, the RBA did not produce much of a hawkish bias but they have acknowledged that recent inflation developments have not progressed as quickly as they hoped it to be. On the forward guidance though, it is the same as the statement reads that they are “not ruling anything in or out” still for now.

This article was written by Justin Low at www.forexlive.com.