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Posted: 2024-06-18 04:34:30

The Reserve Bank has kept interest rates on hold at 4.35 per cent.

The cash rate target has been steady for seven months now.

Interest rates will remain at this level for another six weeks at least, until the RBA Board's next meeting in early August.

The majority of market economists surveyed ahead of Tuesday's decision expected the RBA to keep rates on hold, so it hasn't surprised anyone.

It comes after recent data showed the trend unemployment rate ticked up in May, from 3.9 per cent to 4.0 per cent, which is its highest level in two years.

Economists said the slight increase in unemployment in May tracked the RBA's forecasts well, and monetary policy appeared to be having the intended dampening impact on Australia's economy.

The outlook remains uncertain

In a statement accompanying Tuesday's decision, the RBA Board indicated that unemployment will have to rise further to make sure inflation definitely comes down.

"Broader data indicate continuing excess demand in the economy, coupled with elevated domestic cost pressures, for both labour and non-labour inputs," the Board said.

"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.

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