At its meeting today, the Board decided to leave the cash rate unchanged at 3.60\u00a0per\u00a0cent.<\/p>\n
\t\t\t\t\t\t\tInflation has recently picked up.<\/p>\n
Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to
\n\t\t\t\t\t\t\t\tbring aggregate demand and potential supply closer towards balance. More recently, however, inflation has
\n\t\t\t\t\t\t\t\tpicked up. Trimmed mean inflation was 1.0\u00a0per\u00a0cent in the September quarter and
\n\t\t\t\t\t\t\t\t3.0\u00a0per\u00a0cent over the year, up from 2.7\u00a0per\u00a0cent over the year in the June quarter.
\n\t\t\t\t\t\t\t\tThis was materially higher than expected at the time of the August Statement on Monetary
\n\t\t\t\t\t\t\t\t\tPolicy. Headline inflation rose sharply to 3.2\u00a0per\u00a0cent over the year in the
\n\t\t\t\t\t\t\t\tSeptember quarter, a large part of which was expected given the cessation of electricity rebates in a
\n\t\t\t\t\t\t\t\tnumber of states. <\/p>\n
The Board\u0092s judgement is that some of the increase in underlying inflation in the September quarter
\n\t\t\t\t\t\t\t\twas due to temporary factors. The central forecast in the November Statement on Monetary
\n\t\t\t\t\t\t\t\t\tPolicy, which is based on a technical assumption of one more rate cut in 2026, has underlying
\n\t\t\t\t\t\t\t\tinflation rising above 3\u00a0per\u00a0cent in coming quarters before settling at 2.6\u00a0per\u00a0cent
\n\t\t\t\t\t\t\t\tin 2027. <\/p>\n
\t\t\t\t\t\t\tDomestic economic activity is recovering but the outlook remains uncertain.<\/p>\n
Data on consumption suggest that the pick-up in private demand evident in the June quarter is ongoing. The
\n\t\t\t\t\t\t\t\thousing market is continuing to strengthen, a sign that recent interest rate reductions are having an
\n\t\t\t\t\t\t\t\teffect. Housing prices are rising and dwelling construction costs have also started to increase again
\n\t\t\t\t\t\t\t\tafter a period of weak growth. Credit is readily available to both households and businesses.<\/p>\n
Various indicators suggest that labour market conditions remain a little tight, notwithstanding a recent
\n\t\t\t\t\t\t\t\teasing. Growth in employment has slowed by slightly more than expected and the unemployment rate rose to
\n\t\t\t\t\t\t\t\t4.5\u00a0per\u00a0cent in September from 4.3\u00a0per\u00a0cent in August. But measures of labour
\n\t\t\t\t\t\t\t\tunderutilisation remain at low rates, job vacancies are still at a high level and business surveys and
\n\t\t\t\t\t\t\t\tliaison continue to suggest that a significant share of firms are experiencing difficulty sourcing
\n\t\t\t\t\t\t\t\tlabour. Looking through quarterly volatility, wages growth has eased from its peak, but productivity
\n\t\t\t\t\t\t\t\tgrowth has been weak and growth in unit labour costs remains high.<\/p>\n
There are uncertainties about the outlook for domestic economic activity and inflation stemming from both
\n\t\t\t\t\t\t\t\tdomestic and international developments. On the domestic side, if the pick-up in private demand continues
\n\t\t\t\t\t\t\t\tto exceed expectations, this could increase the demand for labour, add to capacity pressures and make it
\n\t\t\t\t\t\t\t\teasier for businesses to pass on cost increases. Alternatively, the improvement in private demand might
\n\t\t\t\t\t\t\t\tnot persist.<\/p>\n
Uncertainty in the global economy remains elevated but so far there has been minimal impact on overall
\n\t\t\t\t\t\t\t\tgrowth and trade, and many forecasters have revised up their near-term expectations for world growth.
\n\t\t\t\t\t\t\t\tTrade policy developments are still expected to have an adverse effect on world growth over time. Beyond
\n\t\t\t\t\t\t\t\ttariffs, a broader range of geopolitical risks remain a threat to the global economy. This could all
\n\t\t\t\t\t\t\t\tweigh on growth in aggregate demand and lead to weaker labour market conditions in the domestic economy.
\n\t\t\t\t\t\t\t<\/p>\n
There are also uncertainties regarding the assessment that monetary policy remains a little restrictive,
\n\t\t\t\t\t\t\t\tthe lags in the effect of recent monetary easing, the balance between aggregate demand and potential
\n\t\t\t\t\t\t\t\tsupply for goods and services, conditions in the labour market and the outlook for productivity growth.
\n\t\t\t\t\t\t\t\tThese uncertainties present risks in both directions to the inflation and employment outlook. <\/p>\n
\t\t\t\t\t\t\tMaintaining price stability and full employment is the priority.<\/p>\n
The recent data on inflation suggest that some inflationary pressure may remain in the economy. With
\n\t\t\t\t\t\t\t\tprivate demand recovering and labour market conditions still appearing a little tight, the Board decided
\n\t\t\t\t\t\t\t\tthat it was appropriate to maintain the cash rate at its current level at this meeting. Financial
\n\t\t\t\t\t\t\t\tconditions have eased since the beginning of the year, but it will take some time to see the full effects
\n\t\t\t\t\t\t\t\tof earlier cash rate reductions. Given this, and the recent evidence of more persistent inflation, the
\n\t\t\t\t\t\t\t\tBoard judged that it was appropriate to remain cautious, updating its view of the outlook as the data
\n\t\t\t\t\t\t\t\tevolve. The Board remains alert to the heightened level of uncertainty about the outlook in both
\n\t\t\t\t\t\t\t\tdirections. <\/p>\n
The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its
\n\t\t\t\t\t\t\t\tdecisions. In doing so, it will pay close attention to developments in the global economy and financial
\n\t\t\t\t\t\t\t\tmarkets, trends in domestic demand, and the outlook for inflation and the labour market. The Board is
\n\t\t\t\t\t\t\t\tfocused on its mandate to deliver price stability and full employment and will do what it considers
\n\t\t\t\t\t\t\t\tnecessary to achieve that outcome.<\/p>\n
\t\t\t\t\t\t\tDecision<\/p>\n
Today\u0092s policy decision was unanimous.<\/p>\n","protected":false},"excerpt":{"rendered":"At its meeting today, the Board decided to leave the cash rate unchanged at 3.60\u00a0per\u00a0cent. Inflation has recently…\n","protected":false},"author":2,"featured_media":61678,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":{"0":"post-261165","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/261165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=261165"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/261165\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/61678"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=261165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=261165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=261165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}