Australia: RBA keeps rates unchanged in March
At its monetary policy meeting on 1 March, 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 markets.
The decision came on the back of a resilient economy, a tighter labor market, faster but still-moderate wage growth and rising inflation. Despite higher wage growth and inflation, the Bank opted to stand pat amid considerable uncertainty regarding the level of inflation in the medium term; it depends on the future evolution of energy prices and supply chain disruptions. The Bank expects underlying inflation to reach 3.3% throughout 2022, before declining to around 2.8% over 2023, as supply constraints ease and consumption patterns normalize.
The Bank maintained a dovish tone in its communiqué, stating that it is “committed to maintaining highly supportive monetary conditions to achieve its objectives of a return to full employment and inflation”. Moreover, it reiterated that it will not raise the cash rate before inflation is sustainably within the 2.0%–3.0% target range, adding that this could require the RBA to “be patient”.
The next monetary policy meeting is scheduled for 5 April.