“The inflation outlook has also been revised materially higher in the updated staff forecasts.
“This partly reflects higher fuel and other commodity prices affected by the conflict in the Middle East.”
Domestic capacity pressures were also judged to have been a little tighter than earlier thought.
Artificial intelligence-related investment was driving rapid growth in prices for technology-related goods and inflation in many goods and services remained high.
Many firms were experiencing cost pressures and were either increasing the prices of their goods and services in response or looking to do so.
“Inflation is now forecast to remain elevated through much of 2027 and is not expected to reach the top of the 2–3% target range until late 2027, around three quarters later than previously forecast,” the RBA said.
“This presents upside risks to inflation expectations; some measures are assessed to have risen lately.”
The increases in the cash rate target since the beginning of the year have tightened financial conditions, the bank said.
The RBA’s move contrasts with the Reserve Bank of New Zealand’s decision on October 28, when it left the Official Cash Rate (OCR) unchanged at 2.75%.
Likewise, the decision was not unanimous – the vote was four to three to hold the OCR at 2.75%.
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