The Reserve Bank of Australia (RBA) has kept interest rates on hold at 4.35% pointing to underlying inflation remaining too high and an uncertain outlook.
Saxo Bank Asia Pacific Chief Investment Strategist Charu Chanana says the RBA remains on the hawkish side in the global central bank spectrum as it continues to stay away from the clear signalling of rate cuts.
“That clearly fails to make an impact on markets, especially coming on a day when markets are awaiting the US election results in a closely-tied race, as well as announcements of further stimulus measures from China,” she says.
The RBA says while inflation has fallen substantially since the peak in 2022, underlying inflation was 3.5% over the year to the September quarter, which was as forecast but is still some way from the 2.5% midpoint of the inflation target.
The RBA does not see inflation returning sustainably to the midpoint of the target until 2026.
“The forecasts published today are very similar to those published in August,” the RBA says.
“The forecast path for underlying inflation reflects a judgement that aggregate demand remains above the economy’s supply capacity, evidenced by the persistence of underlying inflation, surveys of business conditions and ongoing strength in the labour market.”
The S&P/ASX 200 closed down 32.80 points, or 0.40%, to 8,131.80 points, crossing below its 50-day moving average.
All 11 sectors ended the session in the red with the financial sector down 0.74%, energy sliding 0.64% and materials edging back 0.15%.
Mineral Resources (ASX:MIN) regained some of yesterday’s losses to close up 4.09% at $38.20. Lithium producer Liontown Resources (ASX:LTR) also finished in the top five with a 2.50% gain to close at $0.82.
Gold producers Capricorn Metals (ASX:CMM) and West African Resources (ASX:WAF) ended the day down 4.19% at $6.18 and 3.05% at $1.75, respectively. Uranium producer Paladin Energy (ASX:PDN) slipped 3.05% at $9.53.
The S&P/ASX 200 has lost 1.42% for the last five days, and sits 3.01% below its 52-week high.
Write to Angela East at Mining.com.au
Images: iStock
