The AFR View
RBA holds prudent course on rates and inflation
Australia’s central bank is rightly refusing to take the soft option that would risk forcing it to confront more unpalatable choices later. The political debate needs to face up to this.
The Reserve Bank board has maintained a prudent course on interest rates, keeping the cash rate on hold at 4.35 per cent and declaring that monetary policy “will need to be sufficiently restrictive” until it is confident that inflation is headed back into its 2 per cent to 3 per cent target.
As the Financial Review concluded last week, the March quarter Consumer Price Index, while not being so bad as to demand an immediate further cash rate increase, suggested that the deceleration of growth in consumer prices appeared to have stalled around 4 per cent.
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