Australia's Central Bank Keeps Interest Rates On Hold

(MENAFN- IANS) Sydney, Sep 30 (IANS) Australia's central bank on Tuesday decided to keep interest rates on hold in a move that was widely anticipated by economists.

The Reserve Bank of Australia (RBA) said that its Monetary Policy Board voted unanimously to keep the cash rate unchanged at 3.6 per cent during a meeting on Tuesday, Xinhua news agency reported.

The board, which has cut the key interest rate by 0.25 percentage point three times in 2025 from 4.35 per cent at the start of the year, said on Tuesday that there are "uncertainties" about domestic economic activity and inflation stemming from local and international developments.

It acknowledged that Australia's annual rate of headline and underlying inflation was within the RBA's 2-3 per cent target band in the second quarter of 2025, but said inflation in the third quarter may be higher than previously forecast, according to the monetary policy decision statement.

"Uncertainty in the global economy remains elevated. There is a little more clarity on the scope and scale of U.S. tariffs and policy responses in other countries, suggesting that more extreme outcomes are likely to be avoided," the board said in the statement.

It said that trade policy developments are still expected to have an adverse effect on global economic growth, and that a broader range of geopolitical risks remains a "threat" to the global economy.

The Monetary Policy Board will next meet to consider changing the cash rate in early November.

Meanwhile, the Australian government released the final budget outcome for the 2024-25 financial year on Monday, with a final deficit of about 18 billion Australian dollars (about 11.8 billion US dollars), lower than previously forecast.

Treasurer Jim Chalmers and Finance Minister Katy Gallagher handed down the annual budget outcome on Monday, revealing a final underlying cash deficit of just under 10 billion Australian dollars, or 0.4 per cent of gross domestic product (GDP), at the end of the 2024-25 financial year on June 30.

The government's Pre-election Economic and Fiscal Outlook (PEFO) 2025, released earlier this year, forecast a deficit of 27.9 billion Australian dollars for 2024-25. The 2022 PEFO forecast a deficit of 47.1 billion Australian dollars in 2024-25.

Chalmers and Gallagher said in a joint statement that final budget outcomes have been a combined 209 billion Australian dollars, better than projected since the governing Labor Party won power at the 2022 election.

"In dollar terms, we've made more progress on the budget in three years than any government in history," they said.

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