The Reserve Bank of Australia has left the cash rate at a record low 0.1 per cent and does not expect conditions to warrant an increase before 2024.
The RBA held its monthly board meeting on Tuesday against the backdrop of speculation from economists that a rate hike could happen in 2023 or even earlier.
“The board remains committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target,” RBA governor Philip Lowe said.
The bank will not increase the cash rate until actual inflation is sustainably within the 2-3 per cent target range.
This will require the labour market to be tight enough to generate wages growth that is materially higher than existing levels.
“The bank’s central scenario for the economy is that this condition will not be met before 2024,” Dr Lowe said.
The board agreed not to rollover its three-year target bond from the April 2024 government bond to the November 2024 maturity.
The central bank will wind back its bond purchasing program at a rate of $4 billion from September.
These polices are aimed at keeping market interest rates and borrowing rates low.