The Reserve Bank of Australia has left the cash rate unchanged at 4.35% as it assesses whether the three interest rate rises delivered earlier this year are doing enough to slow the economy and bring inflation back under control.

The RBA faces a difficult balancing act. Inflation remains too high and another rate rise is still possible. But there are clearer signs that higher interest rates are slowing growth, particularly in housing, consumer spending and the jobs market.

The central bank said:

With monetary policy judged to be somewhat restrictive, the [RBA] board decided to leave the cash rate target unchanged while it assesses how the economy is evolving.

With monetary policy judged to be somewhat restrictive, the [RBA] board decided to leave the cash rate target unchanged while it assesses how the economy is evolving.

The RBA noted housing market conditions have eased “considerably”. It will now be watching to see whether the slowdown spreads to the broader economy.

Housing will be important to watch

The housing market is one of the clearest areas where the effects of past interest rate hikes are becoming visible.

For mortgage holders, higher rates mean larger repayments and less money available for other spending. Businesses also face higher financing costs, which can weigh on investment and hiring.

House prices have........

© The Conversation