Reserve Bank of Australia Statement on Monetary Policy (SoMP).
- Board’s priority is to return inflation to target
- Considered whether
to pause in Nov, decided a hike would provide more assurance on
inflation - In hiking, judged
risk of inflation staying higher for longer had increased - Whether further
tightening needed will depend on data, balance of risks - Inflation more
persistent than expected, economy a bit stronger than expected - Potential for
further upside surprises to inflation, from both domestic and
external factors - Some measures of
inflation expectations edging up, important to stop this - Board mindful that
many households facing painful squeeze on budgets - RBA raises forecasts
for inflation and GDP growth, trims unemployment and wage forecasts - Sees trimmed mean
inflation at 4.5% end 2023, 3.25% end 2024, 3.0% end 2025 - Sees CPI at 4.5% end
2023, 3.5% end 2024, 3.0% end 2025 - Sees wage growth at
4.0% end 2023, 3.7% end 2024, 3.5% end 2025 - Sees unemployment at
3.75% end 2023, 4.25% end 2024, 4.25% end 2025 - Sees GDP growth at
1.5% end 2023, 2.0% end 2024, 2.25% end 2025 - Forecasts assume
cash rate peaks around 4.5% before declining to 3.5% by end 2025 - Revises up
population forecasts, assumes peak was 2.5% in q3 followed by decline
to 1.5% avg
Headlines via Reuters.
Bolding above is mine. The Bank forecasts both headline and core inflation not returning to the band until the end of 2025. The bank, if you need a reminder is 2 to 3%. The December of 2025 forecast is 2.9%, which of course is the extreme top of the band. The earlier complacency of the RBA is biting them, and the Australian people.
Full text is here:
Statement on Monetary Policy
November 2023