At its meeting today, the Board decided to lower the cash rate target by 25\u00a0basis points to
\n\t\t\t\t\t\t\t\t3.60\u00a0per\u00a0cent.<\/p>\n
\t\t\t\t\t\t\tInflation has continued to moderate.<\/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. In the June quarter, trimmed mean
\n\t\t\t\t\t\t\t\tinflation over the year fell to 2.7\u00a0per\u00a0cent, broadly as expected in May. Headline inflation,
\n\t\t\t\t\t\t\t\twhich has partly been affected by temporary cost of living relief measures, was 2.1\u00a0per\u00a0cent,
\n\t\t\t\t\t\t\t\talso as forecast. Updated staff forecasts for the August meeting suggest that underlying inflation will
\n\t\t\t\t\t\t\t\tcontinue to moderate to around the midpoint of the 2\u20133\u00a0per\u00a0cent range, with the cash rate assumed to follow a
\n\t\t\t\t\t\t\t\tgradual easing path.<\/p>\n
\t\t\t\t\t\t\tThe outlook remains uncertain.<\/p>\n
Uncertainty in the world economy remains elevated. There is a little more clarity on the scope and scale
\n\t\t\t\t\t\t\t\tof US tariffs and policy responses in other countries, suggesting that more extreme outcomes are likely
\n\t\t\t\t\t\t\t\tto be avoided. Trade policy developments are nevertheless still expected to have an adverse effect on
\n\t\t\t\t\t\t\t\tglobal economic activity, and there remains a risk that households and firms delay expenditure pending
\n\t\t\t\t\t\t\t\tstill greater clarity on the outlook. As in May, the forecasts assume that both effects weigh on activity
\n\t\t\t\t\t\t\t\tand inflation in Australia for a period.<\/p>\n
Domestically, private demand appears to have been recovering gradually, real household incomes have picked
\n\t\t\t\t\t\t\t\tup and some measures of financial conditions have eased.<\/p>\n
Various indicators suggest that labour market conditions remain a little tight, although have eased
\n\t\t\t\t\t\t\t\tfurther in recent months. The unemployment rate rose to 4.3\u00a0per\u00a0cent in the month of June and
\n\t\t\t\t\t\t\t\taveraged 4.2\u00a0per\u00a0cent in the June quarter as a whole, in line with the May forecasts. Measures
\n\t\t\t\t\t\t\t\tof labour underutilisation nevertheless remain at low rates and business surveys and liaison suggest that
\n\t\t\t\t\t\t\t\tavailability of labour is still a constraint for a range of employers. Looking through quarterly
\n\t\t\t\t\t\t\t\tvolatility, wages growth has eased from its peak but productivity growth has not picked up and growth in
\n\t\t\t\t\t\t\t\tunit 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. The forecasts released today are for the recovery in household
\n\t\t\t\t\t\t\t\tconsumption growth to be sustained as real incomes rise. Businesses in some sectors, however, continue to
\n\t\t\t\t\t\t\t\treport that weakness in demand is making it difficult to pass on cost increases to final prices. There is
\n\t\t\t\t\t\t\t\ta risk that consumption growth is a little slower than expected, which could weigh on growth in aggregate
\n\t\t\t\t\t\t\t\tdemand and lead to weaker labour market conditions. Alternatively, as real incomes and wealth continue to
\n\t\t\t\t\t\t\t\trise, households might choose to consume more and save less than expected. Labour market outcomes may
\n\t\t\t\t\t\t\t\talso prove stronger than expected, given the signal from a range of leading indicators.<\/p>\n
There are also uncertainties regarding the lags in the effect of recent monetary policy easing and how
\n\t\t\t\t\t\t\t\tfirms\u0092 pricing decisions and wages will respond to the balance between aggregate demand and
\n\t\t\t\t\t\t\t\tpotential supply for goods and services, conditions in the labour market and continued weak productivity
\n\t\t\t\t\t\t\t\toutcomes.<\/p>\n
\t\t\t\t\t\t\tMaintaining price stability and full employment is the priority.<\/p>\n
With underlying inflation continuing to decline back towards the midpoint of the 2\u20133\u00a0per\u00a0cent range and labour market conditions easing
\n\t\t\t\t\t\t\t\tslightly, as expected, the Board judged that a further easing of monetary policy was appropriate. This
\n\t\t\t\t\t\t\t\ttakes the decline in the cash rate since the beginning of the year to 75\u00a0basis points. The Board
\n\t\t\t\t\t\t\t\tnevertheless remains cautious about the outlook, particularly given the heightened level of uncertainty
\n\t\t\t\t\t\t\t\tabout both aggregate demand and potential supply. It noted that monetary policy is well placed to respond
\n\t\t\t\t\t\t\t\tdecisively to international developments if they were to have material implications for activity and
\n\t\t\t\t\t\t\t\tinflation in Australia.<\/p>\n
The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In
\n\t\t\t\t\t\t\t\tdoing so, it will pay close attention to developments in the global economy and financial markets, trends
\n\t\t\t\t\t\t\t\tin domestic demand, and the outlook for inflation and the labour market. The Board is focused on its
\n\t\t\t\t\t\t\t\tmandate to deliver price stability and full employment and will do what it considers necessary to achieve
\n\t\t\t\t\t\t\t\tthat 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 lower the cash rate target by 25\u00a0basis points to 3.60\u00a0per\u00a0cent.…\n","protected":false},"author":2,"featured_media":61678,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-61677","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/61677","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=61677"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/61677\/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=61677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=61677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=61677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}