Official economic forecasts released by the Reserve Bank of Australia

RBA Holds Rates at 13-Year High, Sees Inflation Returning to Target Midpoint by 2026

Nov 5, 2024, 03:31 AM

The Reserve Bank of Australia (RBA) has held its key interest rate steady at a 13-year high, maintaining its restrictive monetary policy stance amid persistent inflationary pressures and a tight labor market. The central bank noted that underlying inflation remains too high and does not expect inflation to return sustainably to the midpoint of its target range until 2026. The RBA stated that policy will need to remain restrictive for some time and acknowledged that policy in Australia is less restrictive than that of most peers, even after recent rate cuts abroad. Unemployment is forecasted to reach 4.3% in December, rising to 4.5% by the end of 2025 and remaining at that level in 2026. Wage growth is projected to ease slightly, with estimates at 3.4% year-on-year in December, decreasing to 3% by 2026. The RBA also revised down its GDP and household consumption forecasts, citing increased global risks and uncertainty regarding the outlook abroad. While acknowledging tentative evidence of increased spending in the September quarter, the bank emphasized its readiness to adjust monetary policy as necessary, stating that it remains data-dependent and is not ruling anything in or out.