Cash Rate Target for December 2023

Interest Rate Increasing

Reserve Bank of Australia (RBA) has placed a pause on the cash rate target for December 2023 after the board meeting held on December 2023

The cash rate target remains the same after last month’s increase. The cash rate target for December 2023 is currently at 4.35 per cent – still the highest cash rate target since 10 years ago. In the prior month, the Board increased interest rates by 25 basis points after maintaining stability for four months. This decision was driven by concerns about the delayed pace of inflation returning to the target range of 2 to 3 percent. The recent rise in cash rate target is impacting the economy, with high inflation affecting real incomes and weakening household consumption growth and dwelling investment. The decision to maintain the current cash rate for December 2023 allows the Board to assess the impacts.

Overall, the Board’s main priority remains to return inflation back to the target range (2-3 per cent range). High inflation makes life difficult for people and damages the functioning of the economy. Hence, although inflation (consumer price index, CPI) in Australia has passed its peak, it is still too high.

CPI inflation is now expected to be around 3½ per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025. While taking measures to ensure that inflation declines within the expected time frame, the Board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.

Want to know more about Cash Rate Target?

Have a read of our article: UNDERSTANDING THE CASH RATE TARGET IN AUSTRALIA

Date revised: 06 December 2023

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