Background: The Reserve Bank of Australia meets eight times a year to check the pulse of the economy and decide whether it needs a caffeine boost or a hard pull on the handbrake. In simple terms, they choose whether to lift the cash rate, cut it, or just pause and kick the can a little further down the road.

What happened: This month, the RBA met and even though inflation popped up like an uninvited cousin at Christmas lunch, they chose to pause the cash rate at 3.60%. Homeowners exhaled, because economists had already started whispering the words no one wanted to hear: rate hike.

What else: The pause doesn’t mean smooth sailing. It simply means the RBA is taking a careful, watchful moment before deciding what comes next. With inflation proving pretty stubborn, all future moves remain on the table.

What's the key learning?

💡Every economy has a theoretical speed limit- the fastest it can grow without sparking inflation. Australia’s speed limit sits at roughly 2%, and growing faster than that strains the system

💡Above 2% growth, businesses struggle to hire, supply chains feel the squeeze and consumers spend more than the economy can produce. All in all, that leads to a rise in prices because demand outpaces capacity.

💡The RBA says Australia grew 2.1% over the year, just over that limit. And even though the RBA has historically kept inflation stable at an average of 2.5%, this year has been prickly and difficult to manage, leading the Governor to choose her words carefully and keep all future decisions open.