On April 1, 2025, the Reserve Bank of Australia (RBA) did something historic. They must have thought it too risky to consider cutting, because they have chosen to hold the OCR at 4.1%. This is the first time during the bank’s April monetary policy meeting that they took this action. It meets the market’s expectations. It demonstrates, given the consensus of economists, that everyone expects rates to stay low.
While the rate remained the same, the RBA’s latest statement was an indication of a more cautious future with the outlook for the economy. Third, it firmly reiterated that bringing inflation sustainably back to target is its “most important” priority. The continued decline in underlying inflation was welcomed, but the RBA reiterated that its monetary policy remains restrictive, signaling the possibility of a rate cut in May should conditions allow.
The OCR had been held at 4.1%. This latest decision reiterates a sense of stability in monetary policy, despite moving economic indicators. The decision was part of the RBA’s eight scheduled meetings for the year, where it regularly assesses monetary policy in response to economic conditions.
At the conclusion of the meeting, which took place at 03:30 GMT, the RBA acknowledged that while the current monetary policy framework is designed to combat inflation effectively, it leaves room for adjustments based on future developments.
It’s a move that economists had long expected. They argued that leaving the OCR at 4.1% would give the RBA the space to pause, assess the ongoing economic slowdown and economic trends more broadly. The bank’s doing the right thing on balance. It understands the need to continue to delicately walk the line between encouraging economic expansion and ensuring price stability.
In its new policy statement, the RBA underscored how critical it is to watch inflation trends very carefully. It showed its seriousness by sticking to its long-run targets for sustainable inflation in the face of strong contrary political pressure. The central bank’s cautious outlook reflects broader concerns about global economic conditions and their potential impact on Australia’s economy.
The RBA clearly intends to maintain a very restrictive monetary policy. This provides reassurance that it would be willing and able to act boldly if inflationary pressures were to reemerge. There is an outside chance of a cut by next May. This decision is contingent upon the expected data confirming a clear downward trend of inflation and overall economic stability.