Inflation continues to be too high

  • September 5, 2023
  • admin

RBA Economic Update

Inflation continues to be too high –

The Board in charge of setting interest rates in Australia have left the rates where they were at 4.10 percent. This comes after they had already raised interest rates by 4 percentage points since last May. They did this to try to balance the economy by controlling how much money people spend and save.

In Australia, prices for things we buy have gone up a lot, and even though they’re going down a bit now, they’re still too high. This makes it tough for people because it affects how much money they have and how much they can buy. The Board expects that it will take until late 2025 for prices to come back to a more reasonable level.

Right now, the economy in Australia isn’t growing as fast as it should. This is mainly because of the high prices.  It’s making it hard for people to spend money and for businesses to plan and grow. The job market is still okay, but it might get a bit tougher next year.

The main goal of the Board is to get prices back to where they should be. High prices hurt everyone and make it hard for the economy to work properly. They want to avoid a situation where people start expecting prices to keep going up, because that can cause even bigger problems.

The Board is keeping a close eye on the situation and might raise interest rates again if needed to get prices under control. They’ll also look at what’s happening globally and how people are spending money before making any big decisions. They’re really determined to make sure inflation is kept in check.

Philip Lowe, the outgoing Governor of The Reserve Bank, explains everything here in detail.

How do the Reserve Bank come to their decisions on Interest Rates?
The Board of the RBA consider the outlook for the global economy, bond yields, the Australian economy, the Australian labour market, housing market & inflation.

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