The Reserve Bank of Australia (RBA) has left interest rates unchanged, at 4.35 percent, following its meeting today.
In a statement, the RBA said inflation had fallen substantially since the peak in 2022, as higher interest rates had been working to bring aggregate demand and supply closer towards balance.
“Headline inflation was 2.8 per cent over the year to the September quarter, down from 3.8 percent over the year to the June quarter,” it said.
“This was as expected due to declines in fuel and electricity prices in the September quarter. But part of this decline reflects temporary cost of living relief.”
The RBA said when those factors were taken out, underlying inflation was 3.5 percent over the year to the September quarter.
“This was as forecast but is still some way from the 2.5 percent midpoint of the inflation target.”
It said the forecast path for underlying inflation reflected a judgement that aggregate demand remained above the economy’s supply capacity, evidenced by the persistence of underlying inflation, surveys of business conditions and ongoing strength in the labour market.
