Borrowers today breathed a sigh of relief as the Reserve Bank of Australia (RBA) today chose to keep the cash rate steady at 4.35 per cent in its final meeting until February. Stagnating retail sales, slowing inflation and a rising number of unemployed job hunters all combined to convince the RBA that current monetary policy settings are sufficient to slow the economy. The strength of retail sales over the Christmas period and the volume of summer holiday spending will help inform the RBA’s next move at the February 2024 meeting. Most incoming data to CreditorWatch points to falling trade among smaller businesses, particularly average value of invoices, which are down an extraordinary 33% year on year.

In good news overseas, inflation has fallen fast in many global economies, including the eurozone where inflation is now running at 2.4 per cent. Very high migration levels to Australia will likely cause our inflation number to fall at a slower rate. However, overseas movements are a good sign that the global factors that impact inflation are very much past their peak.