The Reserve Bank remains confident that Australia’s inflation rate will return to the 2-3% target zone in 2025 despite prevailing economic uncertainty.
After its monthly Board Meeting on March 19, the bank issued a statement confirming that interest rate levels would remain unchanged (cash rate target 4.35%, interest on Exchange Settlement balances 4.25%).
“While there are encouraging signs that inflation is moderating, the economic outlook remains uncertain,” the bank said in a statement.
“The central forecasts are for inflation to return to the target range of 2–3 per cent in 2025, and to the midpoint in 2026.
“Services price inflation is expected to decline gradually as demand moderates and growth in labour and non-labour costs eases.
“Employment is expected to continue to grow moderately, and the unemployment rate and the broader underutilisation rate are expected to increase a bit further.”
The Reserve said, while there were positive trends overseas around bringing “goods price” inflation under control, service price rises were more persistent, and the international outlook retained a “high level of uncertainty”.
“Higher interest rates are working to establish a more sustainable balance between aggregate demand and supply in the economy,” the bank said.
“Accordingly, conditions in the labour market continue to ease gradually, although they remain tighter than is consistent with sustained full employment and inflation at target.”
The full statement is on the Reserve Bank website
