Australia Keeps Interest Rate Unchanged

(RTTNews) - The Reserve Bank of Australia left its benchmark interest rate unchanged on Tuesday as policymakers evaluate the effects of three consecutive rate hikes and the impact of oil supply disruption.

The policy board, governed by Michele Bullock, unanimously voted to hold the cash rate target at 4.35 percent.

The bank had lifted the policy rate by 25 basis points each in February, March and May.

Policymakers expect inflation to remain high for some time as higher fuel prices added directly to inflation and also there are indications that this is passing through to the prices of other goods and services.

After the three increases in the cash rate target, financial conditions became tighter than they were, and the economy showed signs of slowing as expected, the bank said. However, inflation was too high.

The board judged that it was appropriate to hold the interest rate while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.

The board said it will do what it considers necessary to achieve its mandate of price stability and full employment, including increasing the cash rate target further if required.

The board said resolution of the conflict in the Middle East is at an early stage, and there are plausible scenarios where inflation is higher and activity lower than envisaged in the May forecasts.

Upward pressure on global oil prices and inflation will remain as oil supply issues will take some time to resolve, the bank said. A period of prolonged uncertainty may also cause growth to be lower in Australia's major trading partners and in Australia.