RBA makes June 2024 cash rate call

After holding the cash rate in 2024 so far, will the Reserve Bank hold or increase the cash rate in its June interest rate decision? Find out in this special announcement from HR Leader.

After holding the cash rate at 4.35 per cent in its February, March and May decisions, the Reserve Bank of Australia has decided to continue to hold the cash rate at 4.35 per cent.

In a statement, the RBA board said: “Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. But the pace of decline has slowed in the most recent data, with inflation still some way above the midpoint of the 2–3 per cent target range. Over the year to April, the monthly CPI indicator rose by 3.6 per cent in headline terms, and by 4.1 per cent excluding volatile items and holiday travel, which was similar to its pace in December 2023.”

“Broader data indicate continuing excess demand in the economy, coupled with elevated domestic cost pressures, for both labour and non-labour inputs. Conditions in the labour market eased further over the past month but remain tighter than is consistent with sustained full employment and inflation at target. Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth. Recent data revisions suggest that consumption over the past year was stronger than previously suggested. At the same time, output growth has been subdued, and consumption per capita has been declining, as households restrain their discretionary expenditure and inflation weighs on real incomes.”

The news follows the falling of the seasonally-adjusted unemployment rate to four per cent in May – a decline of 0.1 percentage point from 4.1 per cent in April – as reported by HR Leader earlier this month.