MNI BRIEF: RBA Holds Cash Rate At 3.6%

The Reserve Bank of Australia held the cash rate at 3.6% on Wednesday, noting September-quarter inflation may be slightly higher than expected.

The Board said headline and trimmed mean inflation were within the 2-3% target band in Q2, but recent volatile data suggest inflation could exceed earlier forecasts, following its largely anticipated decision. (See MNI RBA WATCH: On Hold, Eyeing Further Labour, CPI Data)

Private demand is recovering more quickly than anticipated, led by stronger household consumption as real incomes rise and financial conditions ease, the Board noted. The housing market is strengthening, indicating recent rate cuts are gaining traction, while credit remains readily available.

Labour market conditions remain firm, with the unemployment rate steady at 4.2% in August, though jobs growth slowed, the Board added. Wages growth has eased from its peak but weak productivity has kept unit labour costs elevated.

The RBA said it remains alert to domestic and global risks and will be guided by upcoming data as it seeks to deliver price stability and full employment.

Governor Michele Bullock will address media at 1530 AEST.