Points from the Statement by the Reserve Bank Board: Monetary Policy Decision

• Inflation remains high at 4.1%,

• Goods price inflation remained lower than its November forecast.

• Services price inflation, however, declined at a more gradual pace in line with the RBA’s earlier forecasts and remains high.

• Wages growth has picked up but is not expected to increase much further and remains consistent with the inflation target.

• Inflation is still weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment.

“The outlook is still highly uncertain.”

• 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.

• Employment is expected to continue to grow moderately, and the unemployment rate and the broader underutilisation rate are expected to increase a bit further.

• services price inflation has remained persistent and the same could occur in Australia.

• uncertainty around the outlook for the Chinese economy and the implications of the conflicts in Ukraine and the Middle East.

• lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while the labour market remains tight

• , the outlook for household consumption also remains uncertain.

Returning inflation to target is the priority.

• To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.

• While recent data indicate that inflation is easing, it remains high.

• The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.

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