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Australia Monetary Policy April 2022

Australia: RBA keeps rates unchanged in April

At its monetary policy meeting on 5 April, the Reserve Bank of Australia (RBA) decided to keep the cash rate unchanged at the all-time low of 0.10%, as widely expected by the market.

Despite the effects of the war in Ukraine on commodity prices driving up inflation worldwide, inflation in Australia has remained only slightly above the Bank’s 2.0–3.0% target range, as wage growth has remained moderate. Much uncertainty remains regarding the paths of wages and inflation in the medium-term. These factors, along with a resilient economy and a strong labor market, pushed the Bank to stand pat and keep the cash rate stable.

The Bank maintained a dovish tone in its communiqué, stating that it will wait for “actual evidence that inflation is sustainably within the 2 to 3 per cent target range before it increases interest rates”. The Bank is expected to publish updated inflation forecasts in May, with its last publicly released forecasts having been made before the eruption of the war in Ukraine. Moreover, it reiterated that supporting full employment remains a policy priority.

The next monetary policy meeting is scheduled for 3 May.

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