Tuesday’s board meeting was also the last chaired by RBA governor Philip Lowe, whose seven-year term ends next week.
Michele Bullock, the RBA’s current deputy governor, will begin in the role on September 18.
The RBA’s decision to pause rates for another month was in line with the expectations of the majority of economists and financial markets, after inflation cooled to 4.9 per cent in July — lower than what was forecast, but above the central bank’s 2-3 per cent target range.
In his final statement as RBA governor, Mr Lowe said although inflation was declining, additional rate increases may be needed to curb inflation.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame, but that will continue to depend upon the data and the evolving assessment of risks,” he said.
Mr Lowe said the central bank’s decision to leave rates unchanged in September came as higher interest rates were already having an impact on inflation, while also noting the the uncertain economic outlook.
“This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook,” he said.
The RBA still forecasts inflation to return to the target range of 2–3 per cent in “late 2025”, and expects unemployment will rise gradually to reach 4.5 per cent by late 2024, Mr Lowe added.
In his statement, the outgoing RBA governor also noted that the Australian economy was experiencing a period of slower growth and was “expected to continue for a while”.
“High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment,” Mr Lowe said.
Speaking in Question Time on Tuesday afternoon, Treasurer Jim Chalmers highlighted the RBA’s observation that the economy was slowing, and said it was his expectation that this would be reflected in National Accounts data being released on Wednesday.
Despite rates remaining on hold for another month, economists are divided about whether the cash rate will stay at 4.1 per cent, or whether there will be another hike.
“The majority of economists, just, still think there’s one more rate rise out there. I don’t,” economist Chris Richardson said.
“Some good forecasters are starting to see that [rate cuts] as early as the opening months of 2024, unless China turns pretty bad.
“I wouldn’t see any rate cuts in Australia for more than a year.”