Australia’s central bank has cautioned that persistently high inflation could delay or halt interest rate cuts, despite earlier signs of 0 the Citi Australia & New Zealand Investment Conference in Sydney on Wednesday, RBA Assistant Governor Sarah Hunter said inflation for July–September is likely stronger than expected, reinforcing market fears that the bank’s rate-cutting cycle could be paused for 1 Bank of Australia staff are actively reviewing and analysing the latest economic trends as they prepare updated forecasts for the November Monetary Policy Statement (MPS), Assistant Governor Sarah Hunter 2 noted that as the RBA looked ahead, a variety of potential outcomes remained uncertain and that the bank’s approach would continue to be 3 added that the RBA board would continue to monitor developments and make further adjustments to monetary policy as needed, reaffirming the central bank’s cautious stance as it assessed upcoming inflation data and economic 4 RBA’s third-quarter inflation numbers, scheduled for release on Oct. 29, will be a crucial test of the central bank’s belief that inflation is heading back to 5 warns inflation could prove tougher to tame Hunter’s remarks follow upside surprises in recent monthly inflation readings for July and August, which indicate that price pressures across services and housing have remained 6 RBA, which has cut the cash rate three times already this year to 3.6%, held steady last month, citing the need for more 7 said the RBA aimed to keep inflation, on average across the cycle, around the 2.5% midpoint of the target band in underlying terms.
However, she cautioned that persistent inflation, especially in labour-intensive sectors, could delay the target 8 about the RBA’s projected neutral rate (the level that doesn’t slow growth), Hunter didn’t offer a specific figure and said it was “a range rather than a point number.” The quarterly CPI will be a key driver for when the next policy shift will come, economists 9 are now split: while some participants continue to anticipate a cut at the RBA’s Nov. 3-4 meeting, others regard the decision as too close to 10 have also revised down expectations of aggressive easing by early 11 resilience complicates easing plans Recent data indicate that household spending is holding up better than forecast, supported by more jobs and a rebound in the housing 12 labor market, meanwhile, is tight: Unemployment remains close to 4%.
These developments are adding to the arguments for rate stability in an effort to avoid rekindling 13 RBA has repeatedly stated that it aims to ensure inflation remains sustainable within its 2-3% target band before cutting rates 14 inflation in particular has been stubborn, with higher costs of wages and strong demand for goods from sectors such as health, education, and hospitality, the central bank 15 her speech titled “Why Productivity Matters for Central Bankers,” Hunter addressed a deeper structural challenge: sluggish productivity 16 said Australia’s medium-term productivity outlook had been revised down, with trend growth now expected at 0.7%, compared with 1% 17 shift implies Australia’s so-called potential growth rate, which is the speed at which it can grow without inflation spiking, is to be a shade lower at 2% a year rather than 2.25%.
Hunter said some of the deceleration could be attributed to growth in the care economy, softer mining output, and underinvestment in 18 conceded that the RBA’s updated assumption for productivity growth might still be too 19 added that, conversely, rapid advances in technologies such as artificial intelligence could develop faster than expected and deliver stronger productivity 20 lagging productivity trend presents a dilemma for 21 productivity implies that any given level of demand would generate more inflation, so the RBA has less comfort in stimulating the economy through rate 22 your strategy with mentorship + daily ideas - 30 days free access to our trading program
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