Rates on hold as inflation pulls back

Nerida Conisbee,
Ray White Chief Economist

There were no surprises today that the Reserve Bank of Australia kept rates on hold. While concerns about a global banking crisis were a likely factor, it is good news that inflation is now pulling back quicker than expected. February inflation came in at 6.8 per cent. If this continues to come down over the coming months, it is likely that we are now at peak interest rates and the next change will be cut.

Housing remains the main driver of inflation, particularly construction costs. However, the rate of increase is slowing, primarily because the increase in the cost of building materials has eased. Rents, however, continue their rapid rise and are unlikely to ease anytime soon given a widespread shortage of homes. Other cost increases which have eased include food and automotive fuel.