Interest rates expected to stay on hold at today's RBA meeting

Interest rates are expected to stay on hold when the Reserve Bank of Australia Board meets this afternoon, the last with Dr Philip Lowe as governor.

While economists have been split in recent months ahead of RBA Board meetings, they are unanimous that today’s decision will be to keep the interest rate at 4.1 percent.

This follows news that the inflation rate has continued to fall, with July figures from the Australian Bureau of Statistics showing it had dropped to 4.9 percent, down from 5.4 percent in June. The board had repeatedly cited high inflation for its decision to increase the cash rate, which has risen 400 basis points since May 2022.

However, the inflation target is between 2 and 3 percent. In his statement at last month’s board meeting, Dr Lowe flagged that further increases were still possible.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks,” he said last month. “In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.

“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

The meeting marks Dr Lowe’s last as governor. Economist Michele Bullock will step into the role in mid September, the first woman to be appointed RBA governor.

More to come

The Australian birth rate is at a record low, new data has shown.

Figures from the Australian Bureau of Statistics have revealed there were 286,998 births registered around the country last year, or 1.5 babies per woman.

Birth rates in Australia have been in a slow decline since the 1990s, down from 1.86 births per woman in 1993. Declining fertility rates among girls and women aged 15 to 19 years was most stark, down two thirds, while for women aged 40 to 44 years, the rate had almost doubled.

“The long-term decline in fertility of younger mums as well as the continued increase in fertility of older mums reflects a shift towards later childbearing,” said Beidar Cho, ABS head of demography statistics. “Together, this has resulted in a rise in median age of mothers to 31.9 years, and a fall in Australia’s total fertility rate.”

The fall in the Australian birth rate is in keeping with worldwide trends, with the United States also seeing fertility rates hit a 32-year low. The Lancet reported earlier this year that, based on current trends, by 2100 more than 97 percent of the world’s countries and territories “will have fertility rates below what is necessary to sustain population size over time”.

On a global scale, the Lancet reported that the total fertility rate had “more than halved over the past 70 years” from about five children per female in the 1950s to 2.2 children in 2021. In countries such as South Korea and Serbia, the rate is already less than 1.1 child for each female.

Governments around the world have tried to incentivise would-be parents, offering money, increased access to childcare and better paid maternity leave.

Experts have said without additional immigration, lower birth rates and an ageing population in Australia could put further pressure on young people, threaten economic growth and create economic uncertainty. However, a study released earlier this year by the University of Canberra showed the cost of raising a child to adulthood was between $474,000 and $1,097,000.

Interest rates expected to stay on hold at today’s RBA meeting

Inflation is heading in the right direction but economists warn we’re not out of the woods yet

Governments around the world are offering incentives to reverse a downward spiral that could threaten economic growth