RBA holds interest rates at 3.6 per cent amid inflation pressures

“On the domestic side, the recovery in momentum has been stronger than expected, especially in the private sector. If this continues, it will likely increase capacity pressures,” the statement said.

“Uncertainty in the global economy remains significant but so far there has been little impact on overall growth and trade in Australia’s major trading partners.”

The decision comes after NAB’s latest monthly business survey showed a five-point drop in both confidence and a three-point drop in trading conditions last month. Business confidence is currently at its lowest level in seven months.

Weakness was seen across all sectors and regions in Australia, with forward orders and exports falling.

But capacity utilization rose for the fourth consecutive month across businesses and is now above the long-term average in most industries tracked by the survey.

NAB chief economist Sally Auld said capacity utilization was now at an 18-month high.

“This will raise concerns that the domestic economy is close to rebounding from capacity constraints,” he said.

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ANZ-Roy Morgan’s weekly measure of consumer confidence showed shoppers are increasingly worried about their situation; Sense of confidence dropped two points last week.

The biggest drop in the survey was on the question of whether it was a good time to buy a major household item, while confidence in household finances fell to its lowest level since November 2023.

ANZ economist Sophia Angala said the latest October monthly inflation report, which showed an increase in price pressures, was putting pressure on consumers.

“According to the four-week moving average, inflation expectations are currently at their highest level since the end of 2023,” he said.

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