RBA Board keeps interest rates on hold again as high inflation digs in

In a widely predicted move, the Reserve Bank of Australia board decided to keep rates on hold at its meeting this afternoon.

In a statement, the board said the cash rate will remain at 4.35 percent, while the interest paid on exchnage settlement balances will also be unchanged at 4.25 percent.

The RBA noted that while inflation has fallen since its peak in 2022, the rate of inflation is still outside the board’s target range of between 2 and 3 percent.

“In underlying terms, as represented by the trimmed mean, the CPI rose by 3.9 percent over the year to the June quarter, broadly as forecast in the May Statement ob Monetary Policy,” the board said. “But the latest numbers also demonstrate that inflation is proving persistent.”

Noting that the economic outlook is uncertain and the road to a more manageable rate of inflation is slow and bumpy, the RBA board now predicts that the 2 to 3 percent rate is more likely to take at least another 12 months. The board has repeatedly stated its resolve to bring inflation to heel since it hit a high of 7.8 percent in December 2022.

“This represents a slightly slower return to market than forecast in May, based on estimates that the gap between aggregate demand and supply in the economy is larger than previously thought,” the board said. “In part, this reflects an increase in the forecast for domestic demand. But it also reflects a judgement that the economy’s capacity to meet that demand is somewhat weaker than previously thought, evidenced by the persistence of inflation and ongoing strength in the labour market.”

Research director at CoreLogic Asia Pacific, Tim Lawless, said the decision was unlikely to impact housing demand.

“Although a stable interest rate decision is seen as a positive for borrowers and housing more broadly, we aren’t expecting today’s outcome will have a material influence on housing trends,” Mr Lawless said. “While stable rates and lower inflation should help to lift consumer sentiment, which has historically shown a close relationship with property sales, the August hold decision may not be enough to see that rise in consumer sentiment flow through to housing market activity.

“Recent growth in property prices has had more to do with low supply, tight rental conditions and demographic factors than sentiment through the housing upswing to date.”

He pointed out that other factors, including ongoing problems with housing affordability and slowing migration were more likely influencing easing property prices.

“Even if sentiment lifts, an improvement in affordability barriers or strengthening in household balance sheets isn’t likely until interest rates start to fall,” he said.

The RBA board is expected to meeting again in six week’s time.

Pinterest shares tumbled after the company projected that revenue growth would slow in the first quarter, amid an advertiser pullback that weighed on its fourth-quarter earnings.

Shares slid 18.5% to $15.10 in after-hours trading after closing the market session down 2.9% at $18.54.

Pinterest reported a 14% increase in fourth-quarter revenue to $1.32 billion, up from $1.15 billion a year earlier, but short of analysts’ estimate of $1.33 billion, according to FactSet. The company posted 17% revenue growth in the third quarter.

The company expects growth to decelerate further in the current first quarter, projecting growth between 11% and 14%. It’s forecasting revenue between $951 million and $971 million.

Chief Executive Officer William Ready said the company needs to broaden its revenue mix and accelerate sales going forward.

“We are not satisfied with our Q4 revenue performance and believe it does not reflect what Pinterest can deliver over time,” he told analysts on a call Thursday. “We are moving with urgency to return over time to the mid-to-high-teens growth, or better than what we have been consistently delivering.”

Pinterest on Thursday recorded a profit of $277.1 million, or 41 cents a share, compared with its profit of $1.85 billion, or $2.68 a share, a year earlier. The $1.85 billion profit in 2024 included a $1.6 billion benefit from deferred tax assets.

Stripping out certain one-time items, Pinterest logged adjusted earnings of 67 cents a share, in line with analyst expectations, according to FactSet.

Ready said the company continues to see headwinds from larger retailers pulling back on advertising spending to protect their margins amid the impact from President Trump’s tariffs.

“We saw continued softness from this cohort of large retailers,” Ready said. “While we see opportunity over the long term, the near-term outlook for this cohort on our platform remains pressured given these headwinds.”

Ready said the company has expanded its footprint among mid-market and small-to-medium business advertisers, as well as international businesses. Still, he said Pinterest had a ways to go to offset the headwinds from larger advertisers, which may become even more pronounced in the current quarter.

Chief Financial Officer Julia Donnelly added that the company is looking to increase its investments in sales and research and development related to artificial-intelligence following the launch of its restructuring effort in January. Pinterest said last month that it would cut about 15% of its workforce, or approximately 700 jobs.

RBA Board keeps interest rates on hold again as high inflation digs in

While good news for borrowers, it is unlikely to impact on demand for housing, industry expert says

The social-media company’s revenue increased 14%, falling short of estimates.