Home topics news Reserve Bank of Australia. Source: RBA News News RBA takes a breather, but businesses feel the heat from past increases Yajush Gupta February 7, 2024 Australia’s central bank has opted to keep interest rates steady and hinted at the possibility of further tightening, aligning with global counterparts in resisting expectations for imminent easing and causing the currency and bond yields to rise. The Reserve Bank has maintained its cash rate at a 12-year high of 4.35% and left the interest rate paid on Exchange Settlement balances unchanged at 4.25%. In its post-meeting statement, the rate-setting board remarked, “A further increase in interest rates cannot be ruled out.” Despite the RBA’s decision to leave the cash rate unchanged, most small businesses, which predominantly utilize variable-rate loans, have felt the impact of the RBA’s 12 rate hikes between May 2022 and June 2023. The statement also noted, “While there are encouraging signs, the economic outlook is uncertain, and the Board remains highly attentive to inflation risks. “The central forecasts anticipate inflation returning to the target range of 2–3 per cent in 2025, and to the midpoint in 2026. Services price inflation is expected to gradually decline as demand moderates and growth in labor and non-labor costs eases. Employment is projected to continue growing moderately, while the unemployment rate and the broader underutilization rate are expected to increase slightly further.” Anneke Thompson, Chief Economist, CreditorWatch said: “In response to a wealth of data pointing to both slowing inflation and a