Keep Interest Rates, RBA Disappoints Aggressive Market Expectations!

<p>&nbsp;The Reserve Bank of Australia (RBA) is not expected to keep interest rates unchanged at 4.10% at its latest meeting.</p><p><br /></p><p>This turned out to miss the expectations of the market which expected the central bank to increase the rate by 25 basis points.</p><p><br /></p><p>The decision to keep rates unchanged gives more time to assess the impact of the hike so far and the economic outlook.</p><p>Inflation in Australia is down but still too high.</p><p>Household consumption growth is weak.</p><p>Conditions in the labor market remain very tight although slightly reduced.</p><p>Efforts to return inflation to the target within a reasonable period of time remain a priority.</p><p>The latest data is consistent with inflation expectations to return to the 2-3% target range.</p><p>Household consumption surveys are a constant source of uncertainty.</p><p>Some further tightening in monetary policy may be necessary.</p><p>However, it will depend on evolving data and risk assessments.</p><p><br /></p><p>The 'Pause' implemented today (Tuesday) missed expectations, but some also predicted that the rate would not change.</p><p><br /></p><p>The Aussie dollar weakened after the decision as some expected it to raise rates. Even so, the RBA still opens the 'door' to tighten further if necessary.</p>