Households, Small Businesses Tighten Purse Strings Despite Hold on Interest Rate

The Reserve Bank of Australia (RBA) has opted to leave the cash rate target unchanged at 4.35 percent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 percent. The decision was made in a board meeting on Tuesday. Recent information indicates that inflation has remained high, but is declining more slowly than expected, according to a media statement released by the RBA on Tuesday afternoon. The CPI grew by 3.6 percent over the year to the March quarter, down from 4.1 percent over the year to December. “Underlying inflation was higher than headline inflation and declined by less,” the statement said. “This was due in large part to services inflation, which remains high and is moderating only gradually....