The shock decision to keep interest rates steady is a reasonable one based on the known unknowns about Trump’s tariffs and the trajectory of inflation.
The paradox of the Reserve Bank of Australia’s decision to keep rates on hold is it is both surprising and substantively meaningless.
No less than 34 out of 36 market economists predicted the RBA would lower official interest rates by a quarter of one percentage point to 3.6 per cent at its two-day board meeting on Monday and Tuesday. The markets had also fully priced in a 0.25 per cent cash rate cut. However, in a shock that defied the experts and left bond investors underwater, the board voted 6-3 to keep the Reserve Bank’s policy rate unchanged at 3.85 per cent.
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The Australian Financial Review’s succinct take on the principles at stake in major domestic and global stories – and what policy makers should do about them.
