RBA holds rates steady ahead of federal election

(Sharecast News) - The Reserve Bank of Australia left rates on hold at 4.1% in line with market expectations as the country prepares to go to the polls in a federal election next month. The central bank's newly-formed monetary policy board said inflation had fallen "substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance".

"Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February statement on monetary policy," it added in a statement.

The RBA also said it was well placed to respond if international uncertainty such as US tariffs encouraged households and businesses to delay spending decisions, but warned that the outlook abroad "remains significant".

"On the macroeconomic policy front, recent announcements from the United States on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures," it said.

Analysts are now tipping a cut at the board's next meeting on May 19-20.

Reporting by Frank Prenesti for Sharecast.com